FINANCIAL MANAGEMENT: For this assignment, you will complete the Unit IV Assignment Worksheet. This assignment will allow you to demonstrate what you have learned in this unit. Access the Unit IV Assi
TABLE 9.4Present Value Interest Factor (PVIFA) for a $1 Ordinary Annuity
| Year | 5% | 6% | 7% | 8% | 9% | 10% | |
| 1 | 0.952 | 0.943 | 0.935 | 0.926 | 0.917 | 0.909 | |
| 2 | 1.859 | 1.833 | 1.808 | 1.783 | 1.759 | 1.736 | |
| 3 | 2.273 | 2.673 | 2.624 | 2.577 | 2.531 | 2.487 | |
| 4 | 3.546 | 3.465 | 3.387 | 3.312 | 3.240 | 3.170 | |
| 5 | 4.329 | 4.212 | 4.100 | 3.993 | 3.890 | 3.791 | |
| 6 | 5.076 | 4.917 | 4.767 | 4.623 | 4.486 | 4.355 | |
| 7 | 5.786 | 5.582 | 5.389 | 5.206 | 5.033 | 4.868 | |
| 8 | 6.463 | 6.210 | 5.971 | 5.747 | 5.535 | 5.335 | |
| 9 | 7.108 | 6.802 | 6.515 | 6.247 | 5.995 | 5.759 | |
| 10 | 7.722 | 7.360 | 7.024 | 6.710 | 6.418 | 6.145 |
Further examination of Table 9.4 shows how the present value of a $1 annuity decreases with various combinations of interest rates and time periods. For example, if $1,000 is paid at the end of each year (beginning with year one) for ten years at an 8% interest rate, the present value of the annuity would be $6,710 ($1,000 × 6.710). If the interest rate is 10% for ten years, the present value of the annuity would be $6,145 ($1,000 × 6.145). These results demonstrate the costs of higher interest rates on the present values of annuities.
