Instructions: a. Match each question with the method listed below that would be used in providing...
Instructions: a. Match each question with the method listed below that would be used in providing a solution. b. Compute the answer to each of the following questions listed below and on the right.
Method
A. Present Value or Future Value of a Single Sum
B. Future Value of an Ordinary Annuity
C. Future Value of an Annuity Due
D. Present Value of an Ordinary Annuity
E. Present Value of an Annuity Due
F. Present Value of a Deferred Annuity
4. What amount should Gary invest now at 12% to provide 5 payments of $5,000 at the end of each year, starting 3 years from now?
Homework Answers
Solution a:
What amount should Gary invest now at 12% to provide 5 payments of $5,000 at the end of each year, starting 3 years from now = Present Value of a Deferred Annuity
Solution b:
Amount to be invested now = $5,000 * Cumulative PV factor at 12% for 3rd to 7th year
= $5,000 * 2.87371 = $14,369
Add Answer to:
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