Karen and Mike currently insure their cars with separate companies, paying $800 and $1,000 a year. If they insured both cars with the same company, they would save 10 percent on the annual premiums. What would be the future value of the annual savings over 10 years based on an annual interest rate of 4 percent? Use Exhibit 1-B 12.006 . (Round FVA factor to 3 decimal places and final answer to 2 decimal places.)
Karen and Mike currently insure their cars with separate companies, paying $800 and $1,000 a year. If they insured both cars with the same company, they would save 10 percent on the annual premiums. What would be the future value of the annual savings over 10 years based on an annual interest rate of 4 percent? Use Exhibit 1-B 12.006 . (Round FVA factor to 3 decimal places and final answer 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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Aa 17.
Transcribed Image Text:Karen and Mike currently insure their cars with separate
companies, paying $800 and $1,000 a year. If they insured both
cars with the same company, they would save 10 percent on the
annual premiums. What would be the future value of the annual
savings over 10 years based on an annual interest rate of 4
percent? Use Exhibit 1-B
12.006
. (Round FVA factor to 3 decimal places and final answer to 2
decimal places.)
Future value.
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