1) What is the present value of a perpetuity

of $ 7,084 per year given an interest rate of 5.5 %, assuming that the first cash flow occurs today?

CORRECT Answer is 135,884

My (wrong) work was 7084/.055=128,800

2) What is the present value of 4 annual payments of $300 each with the first payment being received immediately? Assume you can invest money at a 10% stated rate with semiannual compounding.

CORRECT Answer is 1,042.78

3) What is the present value of 53 annual payments of $ 4,395 each with the first payment being received immediately? Assume you can invest money at a 10% stated rate with semi-annual compounding.

CORRECT Answer is47,004.79

Please show your work on how to solve these questions, either by formula and/or using BA II Plus calculator. No Excel functions please.

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