1. You own an annuity that will pay $5,000 per year for twenty years. If the discount rate is 8%, what is the present value (today) of these cash flows if: (please show work)
The first cash flow is received one year from today?
The first cash flow is received 10 years from today?
2. You want to buy a sports car from Muscle Motors for 87,000. The contract is in the form of a 60-month annuity due at an APR of 7.7 percent. What will your monthly payment be?