Using a Present Value Table - Questions
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The table below shows the present value of an annuity with a contribution of \(\$1\).
\begin{array}{|c|c|c|c|c|c|}
\hline {\text { Present Value of \$1 }} \\
\hline \text { Period } & 1 \% & 2 \% & 3 \% & 4 \% & 5 \% \\
\hline 1 & 0.990099 & 0.980392 & 0.970874 & 0.961538 & 0.952381 \\
\hline 2 & 1.970395 & 1.941561 & 1.91347 & 1.886095 & 1.85941 \\
\hline 3 & 2.940985 & 2.883883 & 2.828611 & 2.775091 & 2.723248 \\
\hline 4 & 3.901966 & 3.807729 & 3.717098 & 3.629895 & 3.545951 \\
\hline 5 & 4.853431 & 4.71346 & 4.579707 & 4.451822 & 4.329477 \\
\hline 6 & 5.795476 & 5.601431 & 5.417191 & 5.242137 & 5.075692 \\
\hline 7 & 6.728195 & 6.471991 & 6.230283 & 6.002055 & 5.786373 \\
\hline
\end{array}
Use the table to calculate the present value of the following annuities, correct to the nearest dollar.
a) \(\$ 6000\) per year for 5 years at \(2 \%\) p.a. compounded annually.
b) \(\$ 10000\) per year for 2 years at \(1 \%\) p.a. compounded annually.
c) \(\$ 13000\) per year for 3 years at \(5 \%\) p.a. compounded annually.
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