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Current Attempt in Progress Maria Medavoy will invest $6,740 a year for 23 years in a fund that will earn 5% annual interest. Click here to view factor tables If the first payment into the fund occurs today, what amount will be in the fund in 23 years? If the first payment occurs at year-end, what amount will be in the fund in 23 years? (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 458,581.)

Current Attempt in Progress Maria Medavoy will invest $6,740 a year for 23 years in a fund that will earn 5% annual interest. Click here to view factor tables If the first payment into the fund occurs today, what amount will be in the fund in 23 years? If the first payment occurs at year-end, what amount will be in the fund in 23 years? (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 458,581.)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question 3 of 11 -/1 E View Policies Current Attempt in Progress Maria Medavoy will invest $6,740 a year for 23 years in a fund that will earn 5% annual interest. Click here to view factor tables If the first payment into the fund occurs today, what amount will be in the fund in 23 years? If the first payment occurs at year-end, what amount will be in the fund in 23 years? (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 458,581.) First payment today $ First payment at year-end eTextbook and Media Save for Later Attempts: 0 of 5 used Submit Answer %24
Transcribed Image Text:Question 3 of 11 -/1 E View Policies Current Attempt in Progress Maria Medavoy will invest $6,740 a year for 23 years in a fund that will earn 5% annual interest. Click here to view factor tables If the first payment into the fund occurs today, what amount will be in the fund in 23 years? If the first payment occurs at year-end, what amount will be in the fund in 23 years? (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 458,581.) First payment today $ First payment at year-end eTextbook and Media Save for Later Attempts: 0 of 5 used Submit Answer %24
Question 5 of 11 - / 1 View Policies Current Attempt in Progress For each of the following cases, indicate (a) to what rate columns, and (b) to what number of periods you would refer in looking up the interest factor. 1. In a future value of 1 table: Annual Number of Years Compounded (a) Rate of Interest (b) Number of Periods Rate Invested а. 11% Annually b. 12% 6 Quarterly 12% 19 Semiannually С. 2. In a present value of an annuity of 1 table: (Round answers to 1 decimal place, e.g. 458,58.1.) Number of Number of Annual Frequency of Years Rents (a) Rate of Interest (b) Number of Periods Rate Rents Invested Involved а. 9% 28 28 Annually % b. 10% 14 28 Semiannually % С. 12% 6 24 Quarterly % eTextbook and Media Save for Later Attempts: 0 of 5 used Submit Answer
Transcribed Image Text:Question 5 of 11 - / 1 View Policies Current Attempt in Progress For each of the following cases, indicate (a) to what rate columns, and (b) to what number of periods you would refer in looking up the interest factor. 1. In a future value of 1 table: Annual Number of Years Compounded (a) Rate of Interest (b) Number of Periods Rate Invested а. 11% Annually b. 12% 6 Quarterly 12% 19 Semiannually С. 2. In a present value of an annuity of 1 table: (Round answers to 1 decimal place, e.g. 458,58.1.) Number of Number of Annual Frequency of Years Rents (a) Rate of Interest (b) Number of Periods Rate Rents Invested Involved а. 9% 28 28 Annually % b. 10% 14 28 Semiannually % С. 12% 6 24 Quarterly % eTextbook and Media Save for Later Attempts: 0 of 5 used Submit Answer
Expert Solution
Introduction
  • Periodical Investments in Annuity can be broadly divided into two categories, Ordinary annuity and Annuity due. 
  • In an Ordinary annuity, investment is made at the end of each period whereas, in an annuity due the payment of investments is made at the beginning of each period. 
  • The value of such a fund in an annuity due method will always be higher because the periodical investments have more time for earning interest, as it is paid at the beginning of the period. 

 

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