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QUESTION 1 A long-lost relative recently created a trust fund for you in her will. Per the terms of the trust fund, you will receive $98,000 per year forever. You, however, must wait 5 years for your first check. If the current discount rate is 3%, what is the value of your inhertiance? QUESTION 2 You would like to find the future value of an ordinary annuity that will pay $3,000 per year for 10 years. If the discount rate is 10%, which formula could you use to find the future value of the annuity? 1.11⁰-1 0.1 O 3000* O 3000* O 3000* O 3000* 1+1.110 0.1 1-1.1-10 0.1 1.1-10-1 0.1

QUESTION 1 A long-lost relative recently created a trust fund for you in her will. Per the terms of the trust fund, you will receive $98,000 per year forever. You, however, must wait 5 years for your first check. If the current discount rate is 3%, what is the value of your inhertiance? QUESTION 2 You would like to find the future value of an ordinary annuity that will pay $3,000 per year for 10 years. If the discount rate is 10%, which formula could you use to find the future value of the annuity? 1.11⁰-1 0.1 O 3000* O 3000* O 3000* O 3000* 1+1.110 0.1 1-1.1-10 0.1 1.1-10-1 0.1

Essentials Of Investments
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
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QUESTION 1 A long-lost relative recently created a trust fund for you in her will. Per the terms of the trust fund, you will receive $98,000 per year forever. You, however, must wait 5 years for your first check. If the current discount rate is 3%, what is the value of your inhertiance? QUESTION 2 You would like to find the future value of an ordinary annuity that will pay $3,000 per year for 10 years. If the discount rate is 10%, which formula could you use to find the future value of the annuity? 3000* O 3000* 3000* O 3000* 1.110_ 0.1 - 1 1+1.1 0.1 10 1-1.1-10 0.1 1.1-10-1 0.1
Transcribed Image Text:QUESTION 1 A long-lost relative recently created a trust fund for you in her will. Per the terms of the trust fund, you will receive $98,000 per year forever. You, however, must wait 5 years for your first check. If the current discount rate is 3%, what is the value of your inhertiance? QUESTION 2 You would like to find the future value of an ordinary annuity that will pay $3,000 per year for 10 years. If the discount rate is 10%, which formula could you use to find the future value of the annuity? 3000* O 3000* 3000* O 3000* 1.110_ 0.1 - 1 1+1.1 0.1 10 1-1.1-10 0.1 1.1-10-1 0.1
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