You are given an annuity-immediate with 11 annual payments of 100 and a final balloon payment at the end of 12 years. At an annual effective interest rate of 3.5%, the present value at time 0 of all the payments is 1,000. Using an annual effective interest rate of 1%, calculate the present value at the beginning of the ninth year of all remaining payments.

The present value at the beginning of the ninth year of all remaining payments is 316.09

Explanation:

It is assumed that it is an ordinary annuity.

First, we need to calculate the final payment.

Use the following formula to calculate the final payment

Final Payment When an annuity is ordinary

Final payment = fv(rate,nper,pmt,pv) * (1+3.5%)

Where

rate = 3.5%

nper = 11

pmt = 100

pv = -1,000

Placing values in the formula

Final payment = fv(3.5%,11,100,-1000)*1.035

Final payment = $150.87

Now calculate the present value at the beginning of the ninth year of all remaining payments.

Present Value = ( Ninth payment / ( 1 + interest rate )^9 ) + ( Tenth payment / ( 1 + interest rate )^10 ) + ( Eleventh payment / ( 1 + interest rate )^11 ) + ( Final payment / ( 1 + interest rate )^11 )

Present Value = ( 100 / ( 1 + 3.5% )^9 ) + ( 100 / ( 1 + 3.5% )^10 ) + ( 100 / ( 1 + 3.5% )^11 ) + ( 150.87 / ( 1 + 3.5% )^11 )

Present Value = 73.37 + 70.89 + 68.49 + 103.34

Present Value = 316.09

1   all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable

3 wants

things that you do not need to have in order to survive, but would like to have

needs

things that you must have in order to survive

goods

physical products

services

tasks that a business perform for customers

resources

items that people can use to make or obtain what they need or want

determine

to settle or decide by choice of alternatives or possiblities

4 i really dont know