Question

help please

13 The Nashville Geets, a professional foosball team has just signed its star player Harold "The Wrist Thomton to a new contract. One of the terms requires the team to make a lump sum payment of $13.49 million to the The Wrist exactly 13 years from today. The team plans to make equal annual deposits into an account that will earn 532 percent in order to fund the payment. How much must the team deposit each year? Multiple Choice o О 5746,21969 o O S708,52630 o О $1,463, 88769 - O o st son, 1967 o О 51,037692 31

Answer 1

13.

Periodic cash deposit can be computed by using formula for FV of annuity as:

FV = C x [(1+r) ⁿ -1/n]

C = FV/[(1+r) ⁿ -1/n]

FV = Future value of deposits = $ 13,490,000

C = Periodic cash deposit

r = Rate per period = 5.32 % or 0.0532 p.a.

n = Number of periods = 13

Substituting all the values on above formula, we get C as:

C = $ 13,490,000/ [(1+0.0532)¹³ -1/0.0532]

   = $ 13,490,000/ [(1.0532)¹³ -1/0.0532]

   = $ 13,490,000/ [(1.96173823011359 -1)/0.0532]

= $ 13,490,000/ (0.96173823011359/0.0532)

   = $ 13,490,000/ 18.0777862803306

   = $ 746,219.69

Hence option “$ 746,219.69” is correct answer.

12.

	Annual Return (xi)	xi-xm	(xi-xm)2
	0.1803	0.075475	0.005696476
	-0.0525	-0.157325	0.024751156
	0.2048	0.099975	0.009995001
	0.0867	-0.018125	0.000328516
Sum of returns ∑ xi	0.4193	∑ (xi - xm)2	0.040771148
Average return (xm)	0.104825	Variance	0.013590383

Average return (x_m) = ∑ x_i /n = 0.4193/4 = 0.104825

Variance = ∑ (x_i - x_m)²/ (n -1) = 0.040771148/ (4 -1) = 0.040771148/3 = 0.013590383 or 0.01359

Hence option “0.01359” is correct answer.