ner will IKto a special bank account at the end of each of 10 years beginning December 31, 2021. Assuming that the bank account pays 6% interest compounded annually, what will be the fund balance after the last payment is made on December 31, 2030? (Round your final answers to nearest whole dollar amount.)
ner will IKto a special bank account at the end of each of 10 years beginning December 31, 2021. Assuming that the bank account pays 6% interest compounded annually, what will be the fund balance after the last payment is made on December 31, 2030? (Round your final answers to nearest whole dollar amount.)
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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I did the “required 1” but stuck on how to do “required 2”
![Exercise 5-10 (Algo) Future and present value [LO5-3, 5-7, 5-8]
Answer each of the following independent questions.
Alex Meir recently won a lottery and has the option of receiving one of the following three prizes: (1) $60,000 cash immediately, (2)
$18,000 cash immediately and a six-period annuity of $7,500 beginning one year from today, or (3) a six-period annuity of $11,800
beginning one year from today. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from
the tables provided.)
1. Assuming an interest rate of 5%, determine the present value for the above options. Which option should Alex choose?
2. The Weimer Corporation wants to accumulate a sum of money to repay certain debts due on December 31, 2030. Weimer will make
annual deposits of $105,000 into a special bank account at the end of each of 10 years beginning December 31, 2021. Assuming that
the bank account pays 6% interest compounded annually, what will be the fund balance after the last payment is made on December
31, 2030?
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
The Weimer Corporation wants to accumulate a sum of money to repay certain debts due on December 31, 2030. Weimer will
make annual deposits of $105,000 into a special bank account at the end of each of 10 years beginning December 31, 2021.
Assuming that the bank account pays 6% interest compounded annually, what will be the fund balance after the last payment
is made on December 31, 2030? (Round your final answers to nearest whole dollar amount.)
Show less
Table or calculator function:
Payment:
Future value:](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3e1bfd6a-3cb6-4031-858f-4ba8da8545b1%2Fb443dfc9-b251-4f69-8d95-4866852d49dd%2Fl0j826_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 5-10 (Algo) Future and present value [LO5-3, 5-7, 5-8]
Answer each of the following independent questions.
Alex Meir recently won a lottery and has the option of receiving one of the following three prizes: (1) $60,000 cash immediately, (2)
$18,000 cash immediately and a six-period annuity of $7,500 beginning one year from today, or (3) a six-period annuity of $11,800
beginning one year from today. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from
the tables provided.)
1. Assuming an interest rate of 5%, determine the present value for the above options. Which option should Alex choose?
2. The Weimer Corporation wants to accumulate a sum of money to repay certain debts due on December 31, 2030. Weimer will make
annual deposits of $105,000 into a special bank account at the end of each of 10 years beginning December 31, 2021. Assuming that
the bank account pays 6% interest compounded annually, what will be the fund balance after the last payment is made on December
31, 2030?
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
The Weimer Corporation wants to accumulate a sum of money to repay certain debts due on December 31, 2030. Weimer will
make annual deposits of $105,000 into a special bank account at the end of each of 10 years beginning December 31, 2021.
Assuming that the bank account pays 6% interest compounded annually, what will be the fund balance after the last payment
is made on December 31, 2030? (Round your final answers to nearest whole dollar amount.)
Show less
Table or calculator function:
Payment:
Future value:
Expert Solution
Step 1
Future Value of Annuity:
- It represents the future worth of the present annuity cash flow stream and is computed by compounding these cash flow streams by an appropriate interest rate.
Information Provided:
Annuity payment = $105,000
Interest rate = 6% compounded annually
No. of payments = 10
Step by step
Solved in 3 steps
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