Can someone please help me with the following question. I am not sure even where to start.

A 5-year annuity of 10 $9,000 seminannual payments will begin 9 years from now, with the first payment coming 9.5 years from now. If the discount rate is 11 percent compounded semiannually, what is the value of this annuity five years from now? What is the value three years from now? What is the current value of the annuity?

1 answer

Treat it like a "present value" problem with the 9 year as you focal date.

PV = 9000(1 - (1.055)^-10)/0.055

= $67,836.63 at the 9 year mark

for its value now
Vaule = 67,836.63(1.055)^-9
= $41,899.12

the value 3 years from now
= 67,836.63(1.055)^-6
= 49,199.69
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