70.2K

Verified Solution

Link Copied!

(1) Use table 12-2 to calculate the present value (in $) of thr ordinary annuity. (Round your answer to the nearest cent.)

Annuity Payment: $8,000 Payment Frequency: every year Time Peiod (years): 20 Nominal Rate (%): 6 Interest Compounded: annually Present value of the annuity: ?

(2) Use table 12-2 to calculate the present value (in $) of thr ordinary annuity. (Round your answer to the nearest cent.)

Annuity Payment: $400 Payment Frequency: every month Time Peiod (years): 2 Nominal Rate (%): 6

Interest Compounded: monthly Present value of the annuity: ?

(3) Solve by using formulas

Annuity Payment: $1,700 Payment Frequency: every year Time Peiod (years): 5 Nominal Rate (%): 5.9 Interest Compounded: annually Present value of the annuity: ?

(4) Use table 12-2 to solve Analysts at Sky West Airline did a 3 year project of expenses. They calculate that the company will need $15,100 at the beginning if each 6 month period to buy fuel, oil, lube, and parts for aircraft operations and maintenance. Sky West can get 4% Interest compounded semiannual from its bank. How much should Sky West deposit now to support the next 3 years of operations and maintenance experience?

TABLE 12-2 Present Value (Amount) of an Ordinary Annuity of S1 \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|} \hline21% & 1% & 121% & 2% & 3% & 4% & 5% & 6% & 7% & 8% & Periods \\ \hline 0.99502 & 0.99010 & 0.98522 & 0.98039 & 0.97087 & 0.96154 & 0.95238 & 0.94340 & 0.93458 & 0.92593 & 1 \\ \hline 1.98510 & 1.97040 & 1.95588 & 1.94156 & 1.91347 & 1.88609 & 1.8594i & 1.83339 & 1.80802 & 1.78326 & 2 \\ \hline 2.97025 & 2.94099 & 2.91220 & 2.88388 & 2.82861 & 2.77509 & 2.72325 & 2.67301 & 2.62432 & 257710 & 3 \\ \hline 3.95050 & 3.90197 & 3.85438 & 3.80773 & 3.71710 & 3.62990 & 3.54595 & 3.46511 & 3.38721 & 3.31213 & 4 \\ \hline 4.92587 & 4.85343 & 4.78264 & 4.71346 & 4.57971 & 4.45182 & 4,32948 & 4.21236 & 4. 10020 & 3.99271 & 5 \\ \hline 5.89638 & 5.79548 & 5.69719 & 5.60143 & 5.41719 & 5.24214 & 5.07569 & 4.91732 & 4.76654 & 4.62288 & 6 \\ \hline 6.86207 & 6.72819 & 6.59821 & 6.47199 & 6.23028 & 6.00205 & 5.78637 & 5.58238 & 5.38929 & 5.20637 & 7 \\ \hline 7.82296 & 7.65168 & 7.48593 & 7.32548 & 7.01969 & 6.73274 & 6.46321 & 6.20979 & 5.97130 & 5.74664 & 8 \\ \hline 8.77906 & 8.56602 & 8.36052 & 8.16224 & 7.78611 & 7.43533 & 7.10782 & 6.80169 & 6.51523 & 6.24689 & 9. \\ \hline 9.73041 & 9.47130 & 9.22218 & 8.98259 & 8.53020 & 8.11090 & 7.72173 & 7.36009 & 7.02358 & 6.71008 & 10 \\ \hline 10.67703 & 10.36763 & 10.07112 & 9.78685 & 9.25262 & 8. 76048 & 8.30641 & 7.88687 & 7.49867 & 7.13896 & 11 \\ \hline 11.61893 & 11.25508 & 10.90751 & 10.57534 & 9.95400 & 9.38507 & 8.86325 & 8.38384 & 7.94269 & 7.53608 & 12. \\ \hline 12.55615 & 12.13374 & 11.73153 & 11.34837 & 10.63496 & 9.98565 & 9.39357 & 8.85268 & 8.35765 & 7.90378 & 13 \\ \hline 13.48871 & 13.00370 & 12.54338 & 12.10625 & 11.29607 & 10.56312 & 9.89864 & 9.29498 & 8.74547 & 8.24424 & 14 \\ \hline 14.41662 & 13.86505 & 13.34323 & 12.84926 & 11.93794 & 11.11839 & 10.37966 & 9.71225 & 9.10791 & 8.55948 & 15 \\ \hline 15.33993 & 14.71787 & 14.13126 & 13.57771 & 12.56110 & 11.65230 & 10.83777 & I0.10590 & 9.44665 & 8.85137 & 16 \\ \hline 16.25863 & 15.56225 & 14.90765 & 14.29187 & 13.16612 & 12.16567 & 11.27407 & 10.47726 & 9.76322 & 9.12164 & 17 \\ \hline 17.17277 & 16.39827 & 15.67256 & 14.99203 & 13.75351 & 12.65930 & 11.68959 & 10.82760 & 10.05909 & 9.37189 & 18 \\ \hline 18.08236 & 17.22601 & 16.42617 & 15.67846 & 14.32380 & 13.13394 & 12.08532 & 11.15812 & 10.33560 & 9.60360 & 19 \\ \hline 18.98742 & 18.04555 & 17.16864 & 16.35143 & 14.87747 & 13.59033 & 12.46221 & 11.46992 & 10.59401 & 9.81815 & 20 \\ \hline 19.88798 & 18.85698 & 17.90014 & 17.01121 & 15.41502 & 14.02916 & 12.82115 & I1. 76408 & 10.83553 & 10.01680 & 21 \\ \hline 20.78406 & 19.66038 & 18.62082 & 17.65805 & 15.93692 & 14.45112 & 13.16300 & 12.04158 & 11.06124 & 10.20074 & 22 \\ \hline 21.67568 & 20.45582 & 19.33086 & 18.29220 & 16.44361 & 14.85684 & 13.48857 & 12. 30338 & 11.27219 & 10.37106 & 23 \\ \hline 22.56287 & 21.24339 & 20.03041 & 18.91393 & 16.93554 & 15.24696 & 13.79864 & 12.55036 & 11.46933 & 10.52876 & 24 \\ \hline 23.44564 & +22.02316 & 20.71961 & 19.52346 & 17.41315 & 15.62208 & 14.09394 & 12.78336 & 11.65358 & 10.67478 & 75 \\ \hline 24.32402 & 22.79520 & 21.39863 & 20.12104 & 17.87684 & 15.98277 & 14.37519 & 13.00317 & 11.82578 & 10.80998 & 26 \\ \hline 25.19803 & 3. 23.55961 & 22.06762 & 20.70690 & 18.32703 & 16.32959 & 14.64303 & 13.2. 105. & 11.98671 & 10.935 .6 & 27 \\ \hline 26.06769 & 24.31644 & 22.72672 & 21.28127 & 18.76411 & 16.66306 & 14.8981 .3 & 13.40616 & 12:13711 & 11.05108 & 28 \\ \hline 26.93302 & 25.06579 & 23.37608 & 21.84438 & 19.18845 & 16.98371 & 15.14107 & 13.59072 & 12.27767 & 11. 1584+1 & 29 \\ \hline 27.79405 & 25.80771 & 24.01584 & 22.39646 & 19.60044 & 17.29203 & 15.37245 & 13.76483 & 12,40904 & 11.25778 & 30 \\ \hline 28.65080 & 26.54229 & 24.64615 & 22.93770 & 20.00043 & 17.58849 & 15.59281 & 13.92909 & 12.53181 & 11.34980 & 31 \\ \hline 29.50328 & 27.26959 & 25.26714 & 23.46833 & 20.38877 & 17.87355 & 15.80268 & 14.08404 & 12.64656 & 11.43500 & 32 \\ \hline 30.35153 & 27.98969 & 25.87895 & 23.98856 & 20.76579 & 18:14765 & 16.00255 & 14.23023 & 12.75379 & 11.51389 & 33 \\ \hline 31.19555 & 28.70267 & 26.48173 & 24.79859 & 21.13184 & 18.41120 & 16.19290 & 14.36814 & 12.85401 & 11.58693 & 34 \\ \hline 32.03537 & 29.40858 & 27.07559 & 24.99862 & 21. .48722 & 18.66461 & 16.37419 & 14.49825 & 12.94767 & 11,65457 & 35 \\ \hline 32.87102 & 30.10751 & 168 & 25.48884 & 21.83235 & 18.90828 & 16.54685 & 14.62099 & 13.03521 & 11.71719 & 36 \\ \hline \end{tabular} ABLE 12-2 Present Value (Amount) of an Ordinary Annuity of \$1 (Continued) \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|} \hline 9% & 10% & 11% & 12% & 13% & 14% & 15% & 16% & 17% & 18% & Periods \\ \hline 0.91743 & 0.90909 & 0.90090 & 0.89286 & 0.88496 & 0.87719 & 0.86957 & 0.86207 & 0.85470 & 0.84746 & 1 \\ \hline 1.75911 & 1.73554 & 1.71252 & 1.69005 & 1.66810 & 1.64666 & 1.62571 & 1.60523 & 1.58521 & 1.56564 & 2 \\ \hline 2.53129 & 2.48685 & 2.44371 & 2.40183 & 2.36115 & 2.32163 & 2.28323 & 2.24589 & 2.20958 & 2.17427 & 3 \\ \hline 3.23972 & 3.16987 & 3.10245 & 3.03735 & 2.97447 & 2.91371 & 2.85498 & 2.79818 & 2.74324 & 2.69006 & 4 \\ \hline 3.88965 & 3.79079 & 3.69590 & 3.60478 & 3.51723 & 3.43308 & 3.35216 & 3.27429 & 3.19935 & 3.12717 & 5 \\ \hline 4.48592 & 4.35526 & 4.23054 & 4.11141 & 3.99755 & 3.88867 & 3.78448 & 3.68474 & 3.58918 & 3.49760 & 6 \\ \hline 5.03295 & 4.86842 & 4.71220 & 4.56376 & 4.42261 & 4.28830 & 4.16042 & 4.03857 & 3.92238 & 3.81153 & 7 \\ \hline 5.53482 & 5.33493 & 5.14612 & 4.96764 & 4.79877 & 4.63886 & 4.48732 & 4.34359 & 4.20716 & 4.07757 & 8 \\ \hline 5.99525 & 5.75902 & 5.53705 & 5.32825 & 5.13166 & 4.94637 & 4.77158 & 4.60654 & 4.45057 & 4. 30302 & 9 \\ \hline 6.41766 & 6.14457 & 5.88923 & 5.65022 & 5.42624 & 5.21612 & 5.01877 & 4.83323 & 4.65860 & 4.49409 & 10 \\ \hline 6.80519 & 6.49506 & 6.20652 & 5,93770 & 5.68694 & 5.45273 & 5.23371 & 5.02864 & 4.83641 & 4.65601 & 11 \\ \hline 7.16073 & 6.81369 & 6.49236 & 6.19437 & 5.91765 & 5.66029 & 5.42062 & 5.19711 & 4.98839 & 4.79322 & 12 \\ \hline 7.48690 & 7.10336 & 6.74987 & 6.42355 & 6.12181 & 5.84236 & 5.58315 & 5.34233 & 5.11828 & 4.90951 & 13 \\ \hline 7.78615 & 7.36669 & 6.98187 & 6.62817 & 6. 30249 & 6.00207 & 5.72448 & 5.46753 & 5.22930 & 5.00806 & 14 \\ \hline 8.06069 & 7.60608 & 7.19087 & 681086 & 6. 46238 & 6.14217 & 5.84737 & 5.57546 & 5.32419 & 5.09158 & 15 \\ \hline 8.31256 & 7.82371 & 7.37916 & 6.97399 & 6.60388 & 6.26506 & 5.95423 & 5.66850 & 5.4059 & 5.1635 & 16 \\ \hline 8.54363 & 8.02155 & 7.54879 & 7.11963 & 6.72909 & 6.37286 & 6.04716 & 5.74870 & 5.47461 & 5. 22233 & 17 \\ \hline 8.75563 & 8.20141 & 7.70162 & 7.24967 & 6.83991 & 6.46742 & 6.12797 & 5.81785 & 5.53385 & 5.97316 & 18 \\ \hline 8.95011 & 8.36492 & 7.83929 & 7.36578 & 6.93797 & 6.55037 & 6.19823 & 5.87746 & 5.58449 & 5.31624 & 19 \\ \hline 9.12855 & 8.51356 & 7.96333 & 7.46944 & 7.02475 & 6.62313 & 6.25933 & 5.92884 & 5.62777 & 5.35275 & 20 \\ \hline 9.29224 & 8.64869 & 8.07507 & 7.56200 & 7.10155 & 6.68696 & 6.31246 & 5.97314 & 5.66476 & 5.38368 & 21 \\ \hline 9.44243 & 8.77154 & 8.17574 & 7.64465 & 7.16951 & 6.7+294 & 6.35866 & 6.01133 & 5.69637 & 5.40990 & 22 \\ \hline 9.58021 & 8.88322 & 8.26643 & 7.71843 & 7.22966 & 6.79206 & 6.39884 & 6.04425 & 5.72340 & 5.43212 & 23 \\ \hline 9,70661 & 8.98474 & 8.34814 & 7.78432 & 7.28288 & 6.83514 & 6.43377 & 6.07263 & 5.74649 & 5.45095 & 24 \\ \hline 9.82258 & 9.07704 & 8.42174 & 7.84314 & 7.32998 & 6.87293 & 6.46+15 & 6.09709 & 5.76623 & 5.46691 & 25 \\ \hline 9.92897 & 9.16095 & 8.48806 & 7.89566 & 7.37167 & 6.90608 & 6.49056 & 6.11818 & 5.78311 & 5.48043 & 26 \\ \hline 10.02658 & 9.23722 & 8.54780 & 7.94255 & 7.40856 & 6.93515 & 6.51353 & 6.13636 & 5.79753 & 5.49189 & 27 \\ \hline 10.11613 & 9.30657 & 8.60162 & 7.98442 & 7.44120 & 6.96066 & 6.53351 & 6.15204 & 5.80985 & 550160 & 28 \\ \hline 10.19828 & 9.36961 & 8.65011 & 8.02181 & 7.47009 & 6.98304 & 6.55088 & 6.16555 & 5.82039 & 5.50983 & 29 \\ \hline 10.27365 & 9.42691 & 8.69379 & 8.05518 & 7.49565 & 7.00266 & 6.56598 & 6.17720 & 5.82939 & 5.51681 & 30 \\ \hline 10.34280 & 9.47901 & 8.73315 & 8.08499 & 7.51828 & 7.01988 & 6.57911 & 6.18724 & 5.83709 & 5.52272 & 31 \\ \hline 10.40624 & 9.52638 & 8.76860 & 8.11159 & 7.53830 & 7.03498 & 6.59053 & 6.19590 & 5.8+366 & 5.52773 & 32 \\ \hline 10.46444 & 9.56943 & 8.80054 & 8.13535 & 7.55602 & 7.04823 & 6.60046 & 6.20336 & 5.84928 & 5.53197 & 3 \\ \hline 10.51784 & 9.60857 & 8.82932 & 8.15656 & 7.57170 & 7.05985 & 6.60910 & 6.20979 & 5.85400 & 5.53657 & 4 \\ \hline 10.56682 & 9.64416 & 8.85524 & 8.17550 & 7.58557 & 7.07005 & 6.61661 & 6.21534 & 5.85820 & 5.53862 & 35 \\ \hline 10.61176 & 9.67651 & 8.87859 & 8.19241 & 7.59785 & 7.07899 & 6.62314 & 6. 22012 & 586171 & 5.5120 & 36 \\ \hline \end{tabular} TABLE 12-2 Present Value (Amount) of an Ordinary Annuity of \$1 \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|} \hline21% & 1% & 121% & 2% & 3% & 4% & 5% & 6% & 7% & 8% & Perio \\ \hline 0.99502 & 0.99010 & 0.98522 & 0.98039 & 0.97087 & 0.96154 & 0.95238 & 0.94340 & 0.93458 & 0.92593 & I \\ \hline 1.98510 & 1.97040 & 1.95588 & 1.94156 & 1.91347 & 1.88609 & 1.85941 & 1.83339 & 1.80802 & 1.78326 & 2 \\ \hline 2.97025 & 2.94099 & 2.91220 & 2.88388 & 2.82861 & 2.77509 & 2.72325 & 2.67301 & 2.62432 & 2.57710 & 3 \\ \hline 3.95050 & 3.90197 & 3.85438 & 3.80773 & 3.71710 & 3.62990 & 3.54595 & 3.46511 & 3.38721 & 3.31213 & 4 \\ \hline 492587 & 4.85343 & 4.78264 & 4.71346 & 4.57971 & 4.45182 & 4.32948 & 4.21236 & 4.10020 & 3.99271 & 5 \\ \hline 5.89638 & 5.79548 & 5.69719 & 5.60143 & 5.41719 & 5.24214 & 5.07569 & 4.91732 & 4.76654 & 4.62288 & 6 \\ \hline 6.86207 & 6.72819 & 6.59821 & 6.47199 & 6.23028 & 6.00205 & 5.78637 & 5.58238 & 5.38929 & 5.20637 & 7 \\ \hline 7.82296 & 7.65168 & 7. 48593 & 7.32548 & 7.01969 & 6.73274 & 6.4632I & 6.20979 & 5.97130 & 5.74664 & 8 \\ \hline 8.77906 & 8.56602 & 8.36052 & 8.16224 & 7.78611 & 7.43533 & 7.10782 & 6.80169 & 6.51523 & 6. 24689 & 9 \\ \hline 9.73041 & 9.47130 & 9.22218 & 8.98259 & 8.53020 & 8.11090 & 7.72173 & 7.36009 & 7.02358 & 6.71008 & 10 \\ \hline 10.67703 & 10.36763 & 10.07112 & 9.78685 & 9.25262 & 8.76048 & 8.306+1 & 7.88687 & 7.49867 & 7.13896 & II \\ \hline 11.61893 & 11.25508 & 10.90751 & 10.57534 & 9.95400 & 9.38507 & 8.86325 & 8:38384 & 7.94269 & 7.53608 & 12 \\ \hline 12.55615 & 12.13374 & 11.73153 & 11.34837 & 10.63496 & 9.98565 & 9.39357 & 8.85268 & 8.35765 & 7.90378 & 13 \\ \hline 13.48871 & 13.00370 & 1254338 & 12.10625 & 11.29607 & 10.56312 & 9.89864 & 9.29498 & 8.7+547 & 8.24+24 & 14 \\ \hline 14.41662 & 13.86505 & 13.34323 & 12.84926 & 11.93794 & II. 11839 & 10:37966 & 9.71205 & 9.10791 & 8.55948 & 15 \\ \hline 15.33993 & 14.71787 & 14.13126 & 13.57771 & 12.56110 & 11.65230 & 10.83777 & =10.10590 & 9.44665 & 8.85137 & 16 \\ \hline 16.25863 & 15.56225 & 14.907 .65 & 14.29187 & 13.166I2 & 12:16567 & 11.27407 & 10.47726 & 9.76322 & 9.12164 & 17 \\ \hline 17.17277 & 16.39827 & 15.67256 & 14.99203 & 13.7535t & 12.65930 & 11.68959 & 10.82760 & 10.05909 & 9.37189 & 18 \\ \hline 18.08236 & 17.22601 & 16.42617 & 15.67846 & 14.32380 & 13.13394 & 12.08532 & 11.15812 & 10.33560 & 9.60360 & 19 \\ \hline 18.98742 & 18.04555 & 17.16864 & 16.35143 & {[4.87747} & 13.59033 & 12.46221 & 11.46992 & 10.59401 & 9.818 .5 & 20 \\ \hline 19.88798 & 18.85698 & 17.90014 & 17.01121 & 15.41502 & 14.02916 & 12.82115 & 11. 76408 & 10.83553 & 10.01680 & 21 \\ \hline 20.78406 & 19.66038 & 18.62082 & 17.65805 & 15.93692 & 14.45112 & 13.16300 & 12.04158 & 11.06124 & 10.20074 & 22 \\ \hline 21.67568 & 20.45582 & 19.33086 & 18.29220 & 16.44361 & 14.85684 & 13.48857 & 12.30338 & 1127219 & 10.37106 & 23 \\ \hline 22.56287 & 21.24339 & 20.03041 & 18.91393 & 16.93554 & 15.24696 & 13.79864 & 12.55036 & 11. 46933 & 10.52876 & 24 \\ \hline 23.4456t & 22.02316 & 20.71961 & 19.52346 & 17.41315 & 15.62208 & 14.09394 & 12.78336 & 11.65358 & 10.67+78 & 25 \\ \hline 24.32402 & 22.79520 & 2139863 & 20.12104 & 17.87684 & 15.98277 & 14,37519 & 13.00317 & 11.82578 & 10.80998 & 26 \\ \hline 25.19803 & 23.55961 & 22.06762 & 20.70690 & 18.32703 & 16.32959 & 1+64303 & 13.21053 & 11.98671 & 10.93516 & 27 \\ \hline 26.06769 & 2431644 & 22.72672 & 2128127 & 18.76411 & 16.66306 & 14.89813 & 13.40616 & 12.13711 & 11.05108 & 28 \\ \hline 26.93302 & 25.06579 & 23.37608 & 21.84438 & 19.18845 & 16.98371 & 15.14107 & 13.59072 & 12.27767 & 11.15841 & 29 \\ \hline 27.79405 & 25.80771 & 24.01584 & 22.39646 & 19.60044 & 17.29203 & 15.37245 & 13.76483 & 12.40904 & 11.25778 & 30 \\ \hline 28.65080 & 26.54229 & 24.64615 & 22.93770 & 20.00043 & 17.58849 & 15.59281 & 13.92909 & 12.53181 & 11.34980 & 31 \\ \hline 29.50328 & 27.26959 & 25.26714 & 23,46833 & 2038877 & 17.87355 & 15.80268 & 14.08404 & 12.64656 & 11.43500 & 32 \\ \hline 30.35153 & 27.98969 & 25.87895 & 23.98856 & 20.76579 & 18.14765 & 16.00255 & 14.23023 & 12,75379 & 11.51389 & 33 \\ \hline 31.19555 & 28.70267 & 26.48173 & 24.49859 & 21.13184 & 18.+1120 & 16.19290 & 14.36814 & 12.85401 & 11.58693 & 34 \\ \hline 32.03537 & 29.40858 & 27.07559 & 24.99862 & 21.48722 & 18.66+61 & 16.37419 & 14.49825 & 12.94767 & 11.65457 & 35 \\ \hline 32.87102 & 30.10751 & 27.66068 & 25.48884 & 21.83225 & 18.90828 & 16.54685 & 14.62099 & 13.03521 & 11.71719 & 36 \\ \hline \end{tabular}

Answer & Explanation Solved by verified expert

See Answer