Question: How do I solve problem 5A? Formula required to use: Present Vaule (PV) = C (cash flow) / (1 + interest rate) N (number of
How do I solve problem 5A?
Formula required to use: Present Vaule (PV) = C (cash flow) / (1 + interest rate)N (number of years)
Here is my work:


P5a. I=10% 0CF1=100CF2=100CF3=100CF4=100CF5=100 PV(CF1)=CF1/(1+I)1=100/(1+10%)1=100/(1+0.10)1=$90.91PV(CF2)=CF2/(1+I)2=100/(1+10%)2=100/(1+0.10)2=$82.64PV(CF3)=CF3/(1+I)3=100/(1+10%)3=100/(1+0.10)3=$75.13PV(CF4)=CF4/(1+I)4=100/(1+10%)4=100/(1+0.10)4=$68.30PV(CF5)=CF5/(1+I)5=100/(1+10%)5=100/(1+0.10)5=$62.09 PV(OrdinaryAnnuity)=PV(CF1)+PV(CF2)+PV(CF3)+PV(CF4)+PV(CF5)=$90.91+$82.64+$75.13+$68.30+$62.09=$379.07 5. Find the present value (PV) of the following ordinary annuities. Interest is calculated and paid once a year. (Draw a timeline to visualize each annuity.) a. $100 per year for 5 years at 10% b. $200 per year for 4 years at 5% c. $400 per year for 3 years at 0%
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