For each of the following annuities, calculate the annual cash flow. (Enter rounded answers as
directed, but do not use rounded numbers in intermediate calculations. Round your answers to 2
decimal places (e.g., 32.16).)
Solution
Present value of annuity = P×[1-(1÷(1+r)^n)]÷r
r is interest rate per period
P is payment per period
n is number of payments
$33,100 = P×[1-(1÷(1+10%)^6)]÷10%
Annual cash flows, P = $7,600
$30,700 = P×[1-(1÷(1+8%)^8)]÷8%
Annual cash flows, P = $5,342.25
$170,000 = P×[1-(1÷(1+13%)^17)]÷13%
Annual cash flows, P = $25,263.43
$243,300 = P×[1-(1÷(1+12%)^24)]÷12%
Annual cash flows, P = $31,255.16