A business has been involved in a lawsuit that they have lost in court. The judge has ordered money to be put in escrow during the appeal. This is to guarantee that the plaintiff will be able to receive the judgement, if the company loses its appeal. The plaintiff has been awarded annual payments in the amount of $15,000.00 for 16 years with the first payment to be made as soon as the appeal is decided. It was agreed by the judge and both parties that an estimated time for the the appeals process will last 7 years. If money is worth 4%, compounded annual. How much did the judge order the company to put into the annuity today at the start of the appeal process? The company put $ into the annuity at the start of the appeal process. (Round to 2 decimal places.)
A business has been involved in a lawsuit that they have lost in court. The judge has ordered money to be put in escrow during the appeal. This is to guarantee that the plaintiff will be able to receive the judgement, if the company loses its appeal. The plaintiff has been awarded annual payments in the amount of $15,000.00 for 16 years with the first payment to be made as soon as the appeal is decided. It was agreed by the judge and both parties that an estimated time for the the appeals process will last 7 years. If money is worth 4%, compounded annual. How much did the judge order the company to put into the annuity today at the start of the appeal process? The company put $ into the annuity at the start of the appeal process. (Round to 2 decimal places.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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niya has been awarded annual payments in the amount of $15,000.00 for 16 years with 4% compounded annually. how much does niya put down today to have for 7 in years?
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Transcribed Image Text:A business has been involved in a lawsuit that they have lost in court. The judge has ordered money to be
put in escrow during the appeal. This is to guarantee that the plaintiff will be able to receive the
judgement, if the company loses its appeal. The plaintiff has been awarded annual payments in the amount
of $15,000.00 for 16 years with the first payment to be made as soon as the appeal is decided. It was
agreed by the judge and both parties that an estimated time for the the appeals process will last 7 years. If
money is worth 4%, compounded annual. How much did the judge order the company to put into the
annuity today at the start of the appeal process?
The company put $
into the annuity at the start of the appeal process. (Round to 2 decimal
places.)
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Expert Solution
Step 1
Present Value of annuity due and Future Value of annuity due formula will be used to calculate the required answer as the payments to the plaintiff are at the beginning of the period.
C is annual payments to plaintiff
r is the annual compounding rate
n is time period for the annual payments
FV is the present value of annual payments seven years from the first annuity deposit.
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