Homework Help is Here – Start Your Trial Now!
Business
Finance
Ron Sample is the grand prize winner in a college tuition essay contest awarded through a local organization's scholarship fund. The winner receives $6,000 at the beginning of each year for the next 5 years. How much (in $) should be invested at 6% interest compounded annually to award the prize?

Ron Sample is the grand prize winner in a college tuition essay contest awarded through a local organization's scholarship fund. The winner receives $6,000 at the beginning of each year for the next 5 years. How much (in $) should be invested at 6% interest compounded annually to award the prize?

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
Problem 1PS
See similar textbooks
icon
Related questions
Question
Use Table 12-2 to solve.
Ron Sample is the grand prize winner in a college tuition essay contest awarded through a local organization's scholarship fund. The winner receives $6,000 at the beginning of each year for the next 5 years. How much (in $) should be invested at 6% interest compounded annually to award the prize? (Round your answer to the nearest cent.)

 

TABLE 12-2 Present Value (Amount) of an Ordinary Annuity of $1 Periods 1% % 2% 3% 4% 5% 6% 7% 8% Periods 2 1 0.99502 0.99010 0.98522 0.98039 0.97087 0.96154 0.95238 0.94340 0.93458 0.92593 1 2 1.98510 1.97040 1.95588 1.94156 1.91347 1.88609 1.85941 1.83339 1.80802 1.78326 3 2.97025 2.94099 2.91220 2.88388 2.82861 2.77509 2.72325 2.67301 2.62432 2.57710 3 4 3.95050 3.90197 3.85438 3.80773 3.71710 3.62990 3.54595 3.46511 3.38721 3.31213 4 4.92587 4.85343 4.78264 4.71346 4.57971 4.45182 4.32948 4.21236 4.10020 3.99271 6. 5.89638 5.79548 5.69719 5.60143 5.41719 5.24214 5.07569 4.91732 4.76654 4.62288 7 6.86207 6.72819 6.59821 6.47199 6.23028 6.00205 5.78637 5.58238 5.38929 5.20637 7.82296 7.65168 7.48593 7.32548 7.01969 6.73274 6.46321 6.20979 5.97130 5.74664 9. 8.77906 8.56602 8.36052 8.16224 7.78611 7.43533 7.10782 6.80169 6.51523 6.24689 9. 10 9.73041 9.47130 9.22218 8.98259 8.53020 8.11090 7.72173 7.36009 7.02358 6.71008 10 11 10.67703 10.36763 10.07112 9.78685 9.25262 8.76048 8.30641 7.88687 7.49867 7.13896 11 12 11.61893 11.25508 10.90751 10.57534 9.95400 9.38507 8.86325 8.38384 7.94269 7.53608 12 13 12.55615 12.13374 11.73153 11.34837 10.63496 9.98565 9.39357 8.85268 8.35765 7.90378 13 14 13.48871 13.00370 12.54338 12.10625 11.29607 10.56312 9.89864 9.29498 8.74547 8.24424 14 15 14.41662 13.86505 13.34323 12.84926 11.93794 11.11839 10.37966 9.71225 9.10791 8.55948 15 16 15.33993 14.71787 14.13126 13.57771 12.56110 11.65230 10.83777 10.10590 9.44665 8.85137 16 17 16.25863 15.56225 14.90765 14.29187 13.16612 12.16567 11.27407 10.47726 9.76322 9.12164 17 18 17.17277 16.39827 15.67256 14.99203 13.75351 12.65930 11.68959 10.82760 10.05909 9.37189 18 19 18.08236 17.22601 16.42617 15.67846 14.32380 13.13394 12.08532 11.15812 10.33560 9.60360 19 20 18.98742 18.04555 17.16864 16.35143 14.87747 13.59033 12.46221 11.46992 10.59401 9.81815 20 21 19.88798 18.85698 17.90014 17.01121 15.41502 14.02916 12.82115 11.76408 10.83553 10.01680 21 22 20.78406 19.66038 18.62082 17.65805 15.93692 14.45112 13.16300 12.04158 11.06124 10.20074 22 23 21.67568 20.45582 19.33086 18.29220 16.44361 14.85684 13.48857 12.30338 11.27219 10.37106 23 24 22.56287 21.24339 20.03041 18.91393 16.93554 15.24696 13.79864 12.55036 11.46933 10.52876 24 25 23.44564 22.02316 20.71961 19.52346 17.41315 15.62208 14.09394 12.78336 11.65358 10.67478 25 26 24.32402 22.79520 21.39863 20.12104 17.87684 15.98277 14.37519 13.00317 11.82578 10.80998 26 27 25.19803 23.55961 22.06762 20.70690 18.32703 16.32959 14.64303 13.21053 11.98671 10.93516 27 28 26.06769 24.31644 22.72672 21.28127 18.76411 16.66306 14.89813 13.40616 12.13711 11.05108 28 29 26.93302 25.06579 23.37608 21.84438 19.18845 16.98371 15.14107 13.59072 12.27767 11.15841 29 30 27.79405 25.80771 24.01584 22.39646 19.60044 17.29203 15.37245 13.76483 12.40904 11.25778 30 31 28.65080 26.54229 24.64615 22.93770 20.00043 17.58849 15.59281 13.92909 12.53181 11.34980 31 32 29.50328 27.26959 25.26714 23.46833 20.38877 17.87355 15.80268 14.08404 12.64656 11.43500 32 33 30.35153 27.98969 25.87895 23.98856 20.76579 18.14765 16.00255 14.23023 12.75379 11.51389 33 34 31.19555 28.70267 26.48173 24.49859 21.13184 18.41120 16.19290 14.36814 12.85401 11.58693 34 35 32.03537 29.40858 27.07559 24.99862 21.48722 18.66461 16.37419 14.49825 12.94767 11.65457 35 36 32.87102 30.10751 27.66068 25.48884 21.83225 18.90828 16.54685 14.62099 13.03521 11.71719 36 (1 + і)" — 1 The values in Table 12-2 were generated by the formula rate per period and n is the total number of periods. and rounded to five decimal places, where i is the interest i(1 + i)" 67
Transcribed Image Text:TABLE 12-2 Present Value (Amount) of an Ordinary Annuity of $1 Periods 1% % 2% 3% 4% 5% 6% 7% 8% Periods 2 1 0.99502 0.99010 0.98522 0.98039 0.97087 0.96154 0.95238 0.94340 0.93458 0.92593 1 2 1.98510 1.97040 1.95588 1.94156 1.91347 1.88609 1.85941 1.83339 1.80802 1.78326 3 2.97025 2.94099 2.91220 2.88388 2.82861 2.77509 2.72325 2.67301 2.62432 2.57710 3 4 3.95050 3.90197 3.85438 3.80773 3.71710 3.62990 3.54595 3.46511 3.38721 3.31213 4 4.92587 4.85343 4.78264 4.71346 4.57971 4.45182 4.32948 4.21236 4.10020 3.99271 6. 5.89638 5.79548 5.69719 5.60143 5.41719 5.24214 5.07569 4.91732 4.76654 4.62288 7 6.86207 6.72819 6.59821 6.47199 6.23028 6.00205 5.78637 5.58238 5.38929 5.20637 7.82296 7.65168 7.48593 7.32548 7.01969 6.73274 6.46321 6.20979 5.97130 5.74664 9. 8.77906 8.56602 8.36052 8.16224 7.78611 7.43533 7.10782 6.80169 6.51523 6.24689 9. 10 9.73041 9.47130 9.22218 8.98259 8.53020 8.11090 7.72173 7.36009 7.02358 6.71008 10 11 10.67703 10.36763 10.07112 9.78685 9.25262 8.76048 8.30641 7.88687 7.49867 7.13896 11 12 11.61893 11.25508 10.90751 10.57534 9.95400 9.38507 8.86325 8.38384 7.94269 7.53608 12 13 12.55615 12.13374 11.73153 11.34837 10.63496 9.98565 9.39357 8.85268 8.35765 7.90378 13 14 13.48871 13.00370 12.54338 12.10625 11.29607 10.56312 9.89864 9.29498 8.74547 8.24424 14 15 14.41662 13.86505 13.34323 12.84926 11.93794 11.11839 10.37966 9.71225 9.10791 8.55948 15 16 15.33993 14.71787 14.13126 13.57771 12.56110 11.65230 10.83777 10.10590 9.44665 8.85137 16 17 16.25863 15.56225 14.90765 14.29187 13.16612 12.16567 11.27407 10.47726 9.76322 9.12164 17 18 17.17277 16.39827 15.67256 14.99203 13.75351 12.65930 11.68959 10.82760 10.05909 9.37189 18 19 18.08236 17.22601 16.42617 15.67846 14.32380 13.13394 12.08532 11.15812 10.33560 9.60360 19 20 18.98742 18.04555 17.16864 16.35143 14.87747 13.59033 12.46221 11.46992 10.59401 9.81815 20 21 19.88798 18.85698 17.90014 17.01121 15.41502 14.02916 12.82115 11.76408 10.83553 10.01680 21 22 20.78406 19.66038 18.62082 17.65805 15.93692 14.45112 13.16300 12.04158 11.06124 10.20074 22 23 21.67568 20.45582 19.33086 18.29220 16.44361 14.85684 13.48857 12.30338 11.27219 10.37106 23 24 22.56287 21.24339 20.03041 18.91393 16.93554 15.24696 13.79864 12.55036 11.46933 10.52876 24 25 23.44564 22.02316 20.71961 19.52346 17.41315 15.62208 14.09394 12.78336 11.65358 10.67478 25 26 24.32402 22.79520 21.39863 20.12104 17.87684 15.98277 14.37519 13.00317 11.82578 10.80998 26 27 25.19803 23.55961 22.06762 20.70690 18.32703 16.32959 14.64303 13.21053 11.98671 10.93516 27 28 26.06769 24.31644 22.72672 21.28127 18.76411 16.66306 14.89813 13.40616 12.13711 11.05108 28 29 26.93302 25.06579 23.37608 21.84438 19.18845 16.98371 15.14107 13.59072 12.27767 11.15841 29 30 27.79405 25.80771 24.01584 22.39646 19.60044 17.29203 15.37245 13.76483 12.40904 11.25778 30 31 28.65080 26.54229 24.64615 22.93770 20.00043 17.58849 15.59281 13.92909 12.53181 11.34980 31 32 29.50328 27.26959 25.26714 23.46833 20.38877 17.87355 15.80268 14.08404 12.64656 11.43500 32 33 30.35153 27.98969 25.87895 23.98856 20.76579 18.14765 16.00255 14.23023 12.75379 11.51389 33 34 31.19555 28.70267 26.48173 24.49859 21.13184 18.41120 16.19290 14.36814 12.85401 11.58693 34 35 32.03537 29.40858 27.07559 24.99862 21.48722 18.66461 16.37419 14.49825 12.94767 11.65457 35 36 32.87102 30.10751 27.66068 25.48884 21.83225 18.90828 16.54685 14.62099 13.03521 11.71719 36 (1 + і)" — 1 The values in Table 12-2 were generated by the formula rate per period and n is the total number of periods. and rounded to five decimal places, where i is the interest i(1 + i)" 67
TABLE 12-2 Present Value (Amount) of an Ordinary Annuity of $1 (Continued) Periods 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% Periods 1 0.91743 0.90909 0.90090 0.89286 0.88496 0.87719 0.86957 0.86207 0.85470 0.84746 1 2 1.75911 1.73554 1.71252 1.69005 1.66810 1.64666 1.62571 1.60523 1.58521 1.56564 2 3 2.53129 2.48685 2.44371 2.40183 2.36115 2.32163 2.28323 2.24589 2.20958 2.17427 3 4 3.23972 3.16987 3.10245 3.03735 2.97447 2.91371 2.85498 2.79818 2.74324 2.69006 4 3.88965 3.79079 3.69590 3.60478 3.51723 3.43308 3.35216 3.27429 3.19935 3.12717 4.48592 4.35526 4.23054 4.11141 3.99755 3.88867 3.78448 3.68474 3.58918 3.49760 6. 7 5.03295 4.86842 4.71220 4.56376 4.42261 4.28830 4.16042 4.03857 3.92238 3.81153 7 8. 5.53482 5.33493 5.14612 4.96764 4.79877 4.63886 4.48732 4.34359 4.20716 4.07757 8 9 5.99525 5.75902 5.53705 5.32825 5.13166 4.94637 4.77158 4.60654 4.45057 4.30302 9 10 6.41766 6.14457 5.88923 5.65022 5.42624 5.21612 5.01877 4.83323 4.65860 4.49409 10 11 6.80519 6.49506 6.20652 5.93770 5.68694 5.45273 5.23371 5.02864 4.83641 4.65601 11 12 7.16073 6.81369 6.49236 6.19437 5.91765 5.66029 5.42062 5.19711 4.98839 4.79322 12 13 7.48690 7.10336 6.74987 6.42355 6.12181 5.84236 5.58315 5.34233 5.11828 4.90951 13 14 7.78615 7.36669 6.98187 6.62817 6.30249 6.00207 5.72448 5.46753 5.22930 5.00806 14 15 8.06069 7.60608 7.19087 6.81086 6.46238 6.14217 5.84737 5.57546 5.32419 5.09158 15 16 8.31256 7.82371 7.37916 6.97399 6.60388 6.26506 5.95423 5.66850 5.40529 5.16235 16 17 8.54363 8.02155 7.54879 7.11963 6.72909 6.37286 6.04716 5.74870 5.47461 5.22233 17 18 8.75563 8.20141 7.70162 7.24967 6.83991 6.46742 6.12797 5.81785 5.53385 5.27316 18 19 8.95011 8.36492 7.83929 7.36578 6.93797 6.55037 6.19823 5.87746 5.58449 5.31624 19 20 9.12855 8.51356 7.96333 7.46944 7.02475 6.62313 6.25933 5.92884 5.62777 5.35275 20 21 9.29224 8.64869 8.07507 7.56200 7.10155 6.68696 6.31246 5.97314 5.66476 5.38368 21 22 9.44243 8.77154 8.17574 7.64465 7.16951 6.74294 6.35866 6.01133 5.69637 5.40990 22 23 9.58021 8.88322 8.26643 7.71843 7.22966 6.79206 6.39884 6.04425 5.72340 5.43212 23 24 9.70661 8.98474 8.34814 7.78432 7.28288 6.83514 6.43377 6.07263 5.74649 5.45095 24 25 9.82258 9.07704 8.42174 7.84314 7.32998 6.87293 6.46415 6.09709 5.76623 5.46691 25 26 9.92897 9.16095 8.48806 7.89566 7.37167 6.90608 6.49056 6.11818 5.78311 5.48043 26 27 10.02658 9.23722 8.54780 7.94255 7.40856 6.93515 6.51353 6.13636 5.79753 5.49189 27 28 10.11613 9.30657 8.60162 7.98442 7.44120 6.96066 6.53351 6.15204 5.80985 5.50160 28 29 10.19828 9.36961 8.65011 8.02181 7.47009 6.98304 6.55088 6.16555 5.82039 5.50983 29 30 10.27365 9.42691 8.69379 8.05518 7.49565 7.00266 6.56598 6.17720 5.82939 5.51681 30 31 10.34280 9.47901 8.73315 8.08499 7.51828 7.01988 6.57911 6.18724 5.83709 5.52272 31 32 10.40624 9.52638 8.76860 8.11159 7.53830 7.03498 6.59053 6.19590 5.84366 5.52773 32 33 10.46444 9.56943 8.80054 8.13535 7.55602 7.04823 6.60046 6.20336 5.84928 5.53197 33 34 10.51784 9.60857 8.82932 8.15656 7.57170 7.05985 6.60910 6.20979 5.85409 5.53557 34 35 10.56682 9.64416 8.85524 8.17550 7.58557 7.07005 6.61661 6.21534 5.85820 5.53862 35 36 10.61176 9.67651 8.87859 8.19241 7.59785 7.07899 6.62314 6.22012 5.86171 5.54120 36 (1 + i)" – 1 and rounded to five decimal places, where i is the interest The values in Table 12-2 were generated by the formula rate per period and n is the total number of periods. i(1 + i)"
Transcribed Image Text:TABLE 12-2 Present Value (Amount) of an Ordinary Annuity of $1 (Continued) Periods 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% Periods 1 0.91743 0.90909 0.90090 0.89286 0.88496 0.87719 0.86957 0.86207 0.85470 0.84746 1 2 1.75911 1.73554 1.71252 1.69005 1.66810 1.64666 1.62571 1.60523 1.58521 1.56564 2 3 2.53129 2.48685 2.44371 2.40183 2.36115 2.32163 2.28323 2.24589 2.20958 2.17427 3 4 3.23972 3.16987 3.10245 3.03735 2.97447 2.91371 2.85498 2.79818 2.74324 2.69006 4 3.88965 3.79079 3.69590 3.60478 3.51723 3.43308 3.35216 3.27429 3.19935 3.12717 4.48592 4.35526 4.23054 4.11141 3.99755 3.88867 3.78448 3.68474 3.58918 3.49760 6. 7 5.03295 4.86842 4.71220 4.56376 4.42261 4.28830 4.16042 4.03857 3.92238 3.81153 7 8. 5.53482 5.33493 5.14612 4.96764 4.79877 4.63886 4.48732 4.34359 4.20716 4.07757 8 9 5.99525 5.75902 5.53705 5.32825 5.13166 4.94637 4.77158 4.60654 4.45057 4.30302 9 10 6.41766 6.14457 5.88923 5.65022 5.42624 5.21612 5.01877 4.83323 4.65860 4.49409 10 11 6.80519 6.49506 6.20652 5.93770 5.68694 5.45273 5.23371 5.02864 4.83641 4.65601 11 12 7.16073 6.81369 6.49236 6.19437 5.91765 5.66029 5.42062 5.19711 4.98839 4.79322 12 13 7.48690 7.10336 6.74987 6.42355 6.12181 5.84236 5.58315 5.34233 5.11828 4.90951 13 14 7.78615 7.36669 6.98187 6.62817 6.30249 6.00207 5.72448 5.46753 5.22930 5.00806 14 15 8.06069 7.60608 7.19087 6.81086 6.46238 6.14217 5.84737 5.57546 5.32419 5.09158 15 16 8.31256 7.82371 7.37916 6.97399 6.60388 6.26506 5.95423 5.66850 5.40529 5.16235 16 17 8.54363 8.02155 7.54879 7.11963 6.72909 6.37286 6.04716 5.74870 5.47461 5.22233 17 18 8.75563 8.20141 7.70162 7.24967 6.83991 6.46742 6.12797 5.81785 5.53385 5.27316 18 19 8.95011 8.36492 7.83929 7.36578 6.93797 6.55037 6.19823 5.87746 5.58449 5.31624 19 20 9.12855 8.51356 7.96333 7.46944 7.02475 6.62313 6.25933 5.92884 5.62777 5.35275 20 21 9.29224 8.64869 8.07507 7.56200 7.10155 6.68696 6.31246 5.97314 5.66476 5.38368 21 22 9.44243 8.77154 8.17574 7.64465 7.16951 6.74294 6.35866 6.01133 5.69637 5.40990 22 23 9.58021 8.88322 8.26643 7.71843 7.22966 6.79206 6.39884 6.04425 5.72340 5.43212 23 24 9.70661 8.98474 8.34814 7.78432 7.28288 6.83514 6.43377 6.07263 5.74649 5.45095 24 25 9.82258 9.07704 8.42174 7.84314 7.32998 6.87293 6.46415 6.09709 5.76623 5.46691 25 26 9.92897 9.16095 8.48806 7.89566 7.37167 6.90608 6.49056 6.11818 5.78311 5.48043 26 27 10.02658 9.23722 8.54780 7.94255 7.40856 6.93515 6.51353 6.13636 5.79753 5.49189 27 28 10.11613 9.30657 8.60162 7.98442 7.44120 6.96066 6.53351 6.15204 5.80985 5.50160 28 29 10.19828 9.36961 8.65011 8.02181 7.47009 6.98304 6.55088 6.16555 5.82039 5.50983 29 30 10.27365 9.42691 8.69379 8.05518 7.49565 7.00266 6.56598 6.17720 5.82939 5.51681 30 31 10.34280 9.47901 8.73315 8.08499 7.51828 7.01988 6.57911 6.18724 5.83709 5.52272 31 32 10.40624 9.52638 8.76860 8.11159 7.53830 7.03498 6.59053 6.19590 5.84366 5.52773 32 33 10.46444 9.56943 8.80054 8.13535 7.55602 7.04823 6.60046 6.20336 5.84928 5.53197 33 34 10.51784 9.60857 8.82932 8.15656 7.57170 7.05985 6.60910 6.20979 5.85409 5.53557 34 35 10.56682 9.64416 8.85524 8.17550 7.58557 7.07005 6.61661 6.21534 5.85820 5.53862 35 36 10.61176 9.67651 8.87859 8.19241 7.59785 7.07899 6.62314 6.22012 5.86171 5.54120 36 (1 + i)" – 1 and rounded to five decimal places, where i is the interest The values in Table 12-2 were generated by the formula rate per period and n is the total number of periods. i(1 + i)"
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Future Value
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS