Ajax Corporation has hired Brad O'Brien as its new president. Terms included the company's agreeing to pay retirement benefits of $18,600 at the end of each semiannual period for 10 years. This will begin in 3,285 days. If the money can be invested at 8% compounded semiannually, what must the company deposit today to fulfill its obligation to Brad? (Please use the following provided Table and Table 12.3.) (Use 365 days a year. Do not round intermediate calculations. Round your answer to the nearest cent.) Deposit amount 124,779.35
Ajax Corporation has hired Brad O'Brien as its new president. Terms included the company's agreeing to pay retirement benefits of $18,600 at the end of each semiannual period for 10 years. This will begin in 3,285 days. If the money can be invested at 8% compounded semiannually, what must the company deposit today to fulfill its obligation to Brad? (Please use the following provided Table and Table 12.3.) (Use 365 days a year. Do not round intermediate calculations. Round your answer to the nearest cent.) Deposit amount 124,779.35
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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Transcribed Image Text:Ajax Corporation has hired Brad O'Brien as its new president. Terms included the company's agreeing to pay retirement benefits of
$18,600 at the end of each semiannual period for 10 years. This will begin in 3,285 days. If the money can be invested at 8%
compounded semiannually, what must the company deposit today to fulfill its obligation to Brad? (Please use the following provided
Table and Table 12.3.) (Use 365 days a year. Do not round intermediate calculations. Round your answer to the nearest cent.)
Deposit amount
124,779.35
Transcribed Image Text:TABLE
12.3
Present value of $1 at end of period
Perlod
1%
14%
2%
3%
4%
5%
6%
7%
8%
9%
10%
Present value interest factor of an (ordinary) annuity of $1 per period at i% for n periods, PVIFA(i,n).
1
.9901
9852
9804
9709
9615
9524
9434
9346
9259
.9174
9091
riod 0.5% 1.0% 1.5% 2.0% 2.5% 3.0%
3.5%
6.5% 7.0% 7.5%
4.0% 4.5% 5.0%
0.9615 0.9569
1.8727
5.5% 6.0%
9.5% 10.0%
0.9132 0.9091
1.7473 1.7355
2.5089 2.4869
3.2045 3.1699
3.8397 3.7908
4.4198 4.3553
4.9496 4.8684
5.4334 5.3349
6.1191 5.9952 5.8753 5.7590
6.2788 6.1446
6.6473 6.4951
6.9838 6.8137
7.2912 7.1034
7.5719 7.3667
8.5595 8.3042 8.0607 7.8282 7.6061
8.0623 7.8237
8.2760 8.0216
8.7556 8.4713 8.2014
8.6496 8.3649
9.1285 8.8124 85136
8.9611 8.6487
9.4424 9.0969 8.7715
9.2209 8.8832
8.0% 8.5%
0.9259 0.9217
1.7833
9.0%
9803
9707
9612
.9426
9246
9070
8900
8734
8573
8417
8264
0.9950 0.9901
1.9851
1.9704
2.9702
2.9410
3.9505
3.9020
4.9259 4.8534
1
0.9852
0.9804
0.9756
0.9709
0.9662
0.9524
0.9479
0.9434
0.9390
0.9346
1.8206
1,8080
2.6485 2.6243
0.9302
0.9174
1.9416
2.8839
2
1.9559
1.9274
1.9135
1.8997
1.8861
1.8594
1.8463
1.8334
1.7956
1.7711
1.7591
.9706
.9563
9423
9151
8890
8638
8396
8163
7938
7722
7513
3
2.9122
2.8560
2.7751
2.5771
2.8286
3.7171
4.5797
5.4172
2.8016
3.6731
2.7490
3.6299 3.5875
4.4518 4.3900
2.7232
2.6979
2.6730
2.6005
3.3493
4.0459
2.5540
3.2756
2.5313
3.2397
3.8897
4
3.8544
3.8077
3.7620
3.5460
3.5052
4.2703
3.4651
3.4258
4.1557
3.3872
3.3121
3.9927
4
.9610
.9422
.9238
8885
8548
8227
7921
7629
.7350
7084
.6830
4.7826
5.6972
4.7135
4.6458
4.5151
5.3286
4.3295
5.1579 5.0757
5.8927 5.7864 5.6830
4.2124
4.1002
3.9406
6
5.8964
5.7955
5.6014
5.5081
5.2421
4.9955
4.9173
4.8410
4.7665
4.6938
4.6229
4.5536
4.4859
5
.9515
.9283
.9057
8626
8219
7835
7473
7130
.6806
6499
.6209
7
6.8621
6.7282
6.5982
6.4720 6.3494 6.2303
6.1145
6.0021
5.5824
5.4845 5.3893
5.2966
5.2064
5.1185
5.0330
8
.9420
9145
.8880
8375
7903
7462
7050
6663
.6302
5963
5645
7.8230
8.7791
7.6517
7.4859
7.3255
7.1701
7.0197
6.8740
6.7327
6.5959
6.4632
6.3346
6.2098
6.0888
5.9713
5.8573
5.7466
5.6392
5.5348
8.3605 8.1622 7.9709 7.7861
9.2222 8.9826 8.7521
7.4353 7.2688 7.1078 6.9522
7.9127 7.7217
9
8.5660
7.6077
6.8017
6.6561
6.5152
6.3789
6.2469
7
.9327
.9010
.8706
.8131
7599
7107
.6651
.6227
5835
5470
5132
6.5613 6.4177
6.9690 6.8052
10
9.7304
9.4713
8.5302
8.3166
8.1109
7.5376
7.3601
7.1888
7.0236
6.8641
6.7101
11
10.6770 10.3676 10.0711 9.7868 9.5142 9.2526 9.0016 8.7605 8.5289 8.3064 8.0925 7.8869 7.6890
7.4987 7.3154 7.1390
8.
.9235
.8877
8535
7894
7307
.6768
.6274
.5820
5403
5019
4665
12
11.6189 11.2551 10.9075 10.5753 10.2578 9.9540 9.6633
9.3851
9.1186
8.8633
8.6185
8.3838
9.1171 8.8527
8.1587
7.9427
7.7353
7.5361
7.3447
7.1607
13
12.5562 12.1337 11.7315 11.3484 10.9832 10.6350 10.3027 9.9856 9.6829 9.3936
8.5997
8.3577
8.1258
7.9038 7.6910
7 4869
.9143
.8746
8368
7664
.7026
.6446
5919
5439
5002
4604
4241
13.4887 13.0037 12.5434 12.1062 11.6909 11.2961 10.9205 10.5631 10.2228 9.8986 9.5896 9.2950
14.4166 13.8651 13.3432 12.8493 12.3814 11.9379 11.5174 11.1184 10.7395 10.3797 10.0376
15.3399 14.7179 14.1313 13.5777 13.0550 12.5611 12.0941 11.6523 11.2340 10.8378 10.4622 10.1059
14
9.0138
8.7455
8.4892
8.2442
8.0101
7.7862
15
9.7122
9.4027
9.1079
8.8271
10
.9053
.8617
8203
7441
.6756
6139
.5584
5083
4632
4224
3855
16
9.7678
9.4466
9.7632
9.1415
8.8514
9.1216
8.5753
8.3126
8.8252 8.5436
17
16.2586 15.5623 14.9076 14.2919 13.7122 13.1661 12.6513 12.1657 11.7072 11.2741 10.8646 10.4773 10.1106
9.4340
11
.8963
8489
8043
7224
.6496
5847
5268
4751
4289
3875
3505
17.1728 16.3983 15.6726 14.9920 14.3534 13.7535 13.1897 12.6593 12.1600 11.6896 11.2461 10.8276 10.4325 10.0591
18.0824 17.2260 16.4262 15.6785 14.9789 14.3238 13.7098 13.1339 12.5933 12.0853 11.6077 11.1581 10.7347 10.3356
20
18
9.7060
9.3719
9.0555
12
.8874
8364
7885
7014
.6246
5568
4970
4440
3971
3555
3186
9.6036
9.8181
9.2677
9.4633
19
9.9591
8.9501
18.9874 18.0456 17.1686 16.3514 15.5892 14.8775 14.2124 13.5903 13.0079 12.4622 11.9504 11.4699 11.0185 10.5940 10.1945
21
13
.8787
8240
7730
.6810
.6006
.5303
.4688
4150
.3677
3262
2897
19.8880 18.8570 17.9001 17.0112 16.1845 15.4150 14.6980 14.0292 13.4047 12.8212 12.2752 11.7641 11.2850 10.8355 10.4135 10.0168
22
23
22.5629 21.2434 20.0304 18.9139 17.8850 16.9355 16.0584 15.2470 14.4955 13.7986 13.1517 12.5504 11.9907 11.4693 10.9830 10.5288 10.1041 9.7066 9.3341 8.9847
9.6436
9.2922
8700
7579
6611
5775
4423
20.7841 19.6604 18.6208 17.6580 16.7654 15.9369 15.1671 14.4511 13.7844 13.1630 12.5832 12.0416 11.5352 11.0612 10.6172 10.2007
9.8098
14
8119
5051
3878
3405
2992
2633
21.6757 20.4558 19.3309 18.2922 17.3321 16.4436 15.6204 14.8568 14.1478 13.4886 12.8750 12.3034 11.7701 11.2722 10.8067 10.3711
9.9629
9.5802
15
.8613
.7999
7430
.6419
5553
4810
4173
3624
3152
2745
2394
24
25
23.4456 22.0232 20.7196 19.5235 18.4244 17.4131 16.4815 15.6221 14.8282 14.0939 13.4139 12.7834 12.1979 11.6536
26
9.4376 9.0770
11.1469 10.6748 10.2342
13.6625 13.0032 12.3924 11.8258 11.2995 10.8100 10.3541 9.9290 9.5320 9.1609
9.8226
16
.8528
7880
7284
.6232
5339
4581
3936
3387
2919
2519
2176
24.3240 22.7952 21.3986 20.1210 18.9506 17.8768 16.8904 15.9828 15.1466 14.3752
27
25.1980 23.5596 22.0676 20.7069 19.4640 18.3270 17.2854 16.3296 15.4513 14.6430 13.8981 13.2105 12.5750 11.9867 11.4414 10.9352 10.4646 10.0266 9.6183 9.2372
28
17
8444
.7764
.7142
.6050
5134
4363
3714
3166
2703
2311
.1978
26.0677 24.3164 22.7267 21.2813 19.9649 18.7641 17.6670 16.6631 15.7429 14.8981 14.1214 13.4062 12.7465 12.1371 11.5734 11.0511 10.5665 10.1161 9.6971 9.3066
29 26.9330 25.0658 23.3761 21.8444 20.4535 19.1885 18.0358 16.9837 16.0219 15.1411 14.3331 13.5907 12.9075 12.2777 11.696211.1584 10.6603 10.1983
30
9.7690 9.3696
9.8347 9.4269
9.8947 9.4790
9.9495 9.5264
9.9996 9.5694
18
.8360
7649
7002
5874
4936
4155
3503
2959
2502
2120
.1799
27.7941 25.8077 24.0158 22.3965 20.9303 19.6004 18.3920 17.2920 16.2889 15.3725
28.6508 26.5423 24.6461 22.9377 21.3954 20.0004 18.7363 17.5885 16.5444 15.5928 14.7239 13.9291 13.2006 12.5318 11.9166 11.3498 10.8266 10.3428
32
14.5337 13.7648 13.0587 12.4090 11.8104 11.2578 10.7468 10.2737
19
.8277
7536
.6864
5703
4746
.3957
3305
2765
2317
1945
1635
31
29.5033 27 2696 25.2671 23.4683 21.8492 20.3888 19.0689 17.8736 16.7889 15.8027
30.3515 27.9897 25.8790 23.9886 22.2919 20.7658 19.3902 18.1476 17.0229 16.0025
34
14.9042 14.0840 13.3339 12.6466 12.0155 11.4350 10.9001
10.4062
33
15.0751
14.2302 13.4591 12.7538 12.1074 11.5139 10.9678 10.4644
20
.8195
.7425
.6730
5537
4564
3769
3118
2584
2145
.1784
.1486
31.1955 28.7027 26.4817 24.4986 22.7238 21.1318 19.7007 18.4112 17.2468 16.1929 15.2370 14.3681 13.5766 12.8540 12.1929 11.5869 11.0302 10.5178 10.0453 9.6086
35
21
.8114
.7315
.6598
5375
4388
3589
2942
2415
.1987
.1637
.1351
32.0354 29.4086 27.0756 24.9986 23.1452 21.4872 20.0007
36
18.6646 17.4610 16.3742
15.3906 14,4982 13.6870 12.9477 12.2725 11.6546 11.0878
10.5668 10.0870 9.6442
32.8710 30.1075 27.6607 25.4888 23.5563 21.8323 20.2905 18.9083 17.6660 16.5469 15.5361 14.6210 13.7906 13.0352 12.3465 11.7172 11.1408 10.6118 10.1251 9.6765
33.7025 30.7995 28.2371 25.9695 23.9573 22.1672 20.5705 19.1426 17.8622 16.7113
22
.8034
.7207
6468
.5219
4220
.3418
2775
2257
.1839
.1502
.1228
15.6740 14.7368 13.8879 13.1170
12.4154 11.7752 11.1897 10.6530 10.1599 9.7059
37
34.5299 31.4847 28.8051 26.4406 24.3486 22.4925 20.8411 19.3679 18.0500 16.8679 15.8047 14.8460 13.9792 13.1935 12.4794 11.8289 11.2347 10.6908 10.19179.7327
38
35.3531 32.1630 29.3646 26.9026 24.7303 22.8082 21.1025 19.5845 18.2297 17.0170 15.9287 14.9491 14.0650 13.2649
23
7954
7100
.6342
5067
4057
3256
2618
2109
.1703
.1378
.1117
12.5390 11.8786 11.2763
10.7255 10 2207 9.7570
39
36.1722 32.8347 29.9158 27.3555 25.1028 23.1148 21.3551 19.7928 18.4016 17.1591 16.0461 15.0463 14.1455 13.3317 12.5944 11.9246 11.3145 10.7574 10.2472 9.7791
24
.7876
6995
.6217
4919
3901
3101
2470
.1971
.1577
.1264
1015
40
36.9873 33.4997 30.4590 27.7995 25.4661 23.4124 21.5991 19.9931 18.5661 17.2944 16.1575 15.1380 14.2212 13.3941 12.6460 11.9672 11.3498 10.7866 10.2715 9.7991
41
37.7983 34.1581 30.9941 28.2348 25.8206 23.7014 21.8349 20.1856 18.7235 17.4232 16.2630 15.2245 14.2922 13.4524 12.6939 12.0067 11.3823 10.8134 10.2936 9.8174
25
.7798
.6892
6095
.4776
3751
2953
2330
1842
.1460
.1160
.0923
42
38.6053 34.8100 31.5212 28.6616 26.1664 23.9819 22.0627 20.3708 18.8742 17,5459 16.3630 15.3062 14.3588 13.5070 12.7385 12.0432 114123 10.8380 103138 9.8340
43
39.4082 35.4555 32.0406 29.0800 26.5038 24.2543 22.2828 20.5488 19.0184 17.6628 16.4579 15.3832 14.4214 13.5579 12.7800 12.0771 11.4399 10.8605 10.3322 9.8491
40.2072 36.0945 32.5523 29.4902 26.8330 24.5187 22.4955 20.7200 19.1563 17.7741 16.5477 15.4558 14.4802 13.6055 12.8186
26
.7720
.6790
5976
• 4637
3607
2812
2198
.1722
.1352
.1064
0839
44
12.1084 11.4653 10.8812 10.3490 9.8628
10.9002 10.3644 9.8753
10.9176 10.3785 9.8866
10.9336 10.3913 9.8969
10.9482 10.4030 9.9063
45
46
7644
6690
27
5859
4502
3468
2678
2074
.1609
.1252
.0976
.0763
41.0022 36.7272 33.0565 29.8923 27.1542 24.7754 22.7009 20.8847 19.2884 17.8801 16.6329 15.5244 14.5354 13.6500 12.8545 12.1374 11.4888
47
41.7932 37.3537 33.5532 30.2866 27.4675 25.0247 22.8994 21.0429 19.4147 17.9810 16.7137 15.5890 14.5873 13.6916 12.8879 12.1643 11.5104
42.5803 37.9740 34.0426 30.6731 27.7732 25.2667 23.0912 21.1951 19.5356 18.0772 16.7902 15.6500 14.6359 13.7305 12.9190 12.1891 11.5303
43.3635 38.5881 34.5247 31.0521 28.0714 25.5017 23.2766 21.3415 19.6513 18.1687 16.8628 15.7076 14.6816 13.7668 12.9479 12.2122 11.5487
28
7568
.6591
5744
.4371
3335
2551
.1956
.1504
.1159
.0895
.0693
48
29
.7493
.6494
5631
4243
3207
2429
.1846
.1406
1073
.0822
.0630
49
50
44.1428 39.1961 34.9997 31.4236 28.3623 25.7298 23.4556 21.4822 19.7620 18.2559 16.9315 15.7619 14.7245 13.8007 12.9748 12.2335 11.5656 10.9617 10.4137 9.9148
30
.7419
.6398
5521
4120
3083
2314
.1741
.1314
.0994
.0754
.0573
35
.7059
5939
5000
.3554
2534
.1813
1301
.0937
.0676
.0490
.0356
40
.6717
5513
4529
3066
2083
.1420
.0972
.0668
.0460
.0318
.0221
Note: For more detalled tables. see vour booklet. the Business Math Handbook.
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