April Stigum will receive a 20-year annuity of $20,000 annually, beginning six years from today. In other words, the first payment of twenty payments will be made at the end of year 6. Assuming a required rate of return of 5%, calculate the present value today of her annuity. (Round to 2 decimals)
1. April Stigum will receive a 20-year
2. Joe and Sarah Fabozzi are saving for the college education of their newborn daughter (born today), Beth. The Fabozzi's estimate that college expenses will run $55,000 per year when their daughter reaches college in 18 years. In other words, the first withdrawal will be made on Beth's 18th Birthday, and the last payment will be made on Beth's 17th Birthday. The expected interest rate while saving and in college is 10%. The first deposit will be made one year from today. Calculate the annual payment the Fabozzi's must make to the account so their daughter will be supported through four years of college. (Round to 2 decimals)
3. George Anders has just been offered a job at $75,000 per year, with the first payment made one year from today. He anticipates his salary will grow by 4% per year until his retirement in 30 years. Given an interest rate of 10%, calculate the present value of his lifetime salary. (Round to 2 decimals)
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images