1. Find the present value of a 3-year $70 annuity when the stated rate is 6%, compounded quarterly. Make sure you use the lump sum approach. Be very specific as to what each step involves. Then, explain how your answer would have changed if you had been told these payments were payments 'due' and why. Write full sentences out please in addition to calculations.

2. You just rented a penthouse and signed a 5-year lease. The monthly rent is $7,000 until the lease ends. The first payment is due today. Calculate the present value of an entire stream of payments if the APR is 5.24%, compounded monthly.

3. What is the present value of a 4-year-$300 annuity that provides the first payment in 7 years? Your opportunity cost is 10%, continuously compounded.

4. You invested $5,000 in an account 11 years ago. This account paid 5% compounded annually for the first 5 years, and then the rate jumped to 7% compounded semiannually for the next 2 years, and finally, in the last 4 years, the rate was 8% continuously compounded. How much do you have today?

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To find the present value of a 3year 70 annuity when the stated rate is 6 compounded quarterly you w... View the full answer