Steven Combs is the grand prize winner in a college tuition essay contest. He will receive $7,000 at the beginning of each year for the next 5 years. How much (in $) should be invested at 8% interest compounded annually to award the prize?
Steven Combs is the grand prize winner in a college tuition essay contest. He will receive $7,000 at the beginning of each year for the next 5 years. How much (in $) should be invested at 8% interest compounded annually to award the prize?
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
Related questions
Question
100%
Use Table 12-2
*I am having trouble understanding how to get the answer. I always come up with something different. I am must round to the nearest cent*
Steven Combs is the grand prize winner in a college tuition essay contest.
He will receive $7,000 at the beginning of each year for the next 5 years.
How much (in $) should be invested at 8% interest compounded annually to award the prize?
![TABLE 12-2 Present Value (Amount) of an Ordinary Annuity of $1
Periods
1
2
3
4
5
6
7
8
9
10
11
12
1.3
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
1%
0.99502 0.99010
TABLE 12-2 Present Value (Amount) of an Ordinary Annuity of $1 (Continued)
Periods 9% 10%
0.91743 0.90909
1
1.75911 1.73554
2.53129 2.48685
3.23972 3.16987
3.88965 3.79079
25
The values in Table 12-2 were generated by the formula+and rounded to five decimal places, where i is the interest
*(1 +0
rate per period and is the total number of periods.
26
27
28
29
30
← 2%
0.98522 0.98039
1.98510 1.97040 1.95588 1.94156
2.97025 2.94099 2.91220 2.38388
3.55050 3.90197 3.85438 3.80773
4.92587 4.85343 4.78264 4.71346
31
32
33
6
5.89638 5.79548 5.69719 5.60143 541719 5.24214 5.07569 4.91732 4.76654 4.62288 9
6.86207 6.72319 6.50821 6.47199 6.23023 6.00205 5.78637 5.58238 5.38029 5.20637
7
7.82296 7.65168 7.48593 732548 7.01969 673274 646321 6.20979 5.97130 5.74664
8.77905 3.56602 3.36052 3.16224 7.78611 743533 7.10782 6.80169 6.51523 624589
9.73041 9.47130 9.22218 8.98259 8.53020 8.11090
7.72171 7.36009 7.02358 671008
8.11090 7.72173
15.33993 14.71787
16.25863 15.56225
17.17277 16.39827
18.08236 17.22601
18.98742 18.04555
14.13126
14.90765
15.67256
1642617
17.16864
11
8.86325
1067708 10.36763 10.07112 9.78685 9.25262 8.76048 8.30541 7.83687 7.49867 7.13306
11.61898 11.25508 10.90751 10.57534 9.95400 9.38507
8.38384 7.94269 7.53608 12
1255615 1213374 11.73153 11.34837 10.63496 9.98565 9.30357 8.85258 8.35765 7.90378 13
13.48871 13.00370 1254338 1210625 11.29607 10.56312 9.89864 9.29498 8.74547
8.74547 8.24424 14
14.41662 13.86505 13.34323 1284926 11.93794 11.11839 10.37966 9.71225 9.10791 8.55948 15
3% 4% 5% 6% 7% 8% Periods
0.97087 0.96154 0.55238 0.94340 0.93458 0.92593 1
1.91347 1.85509 1.85941 1.83339 1.80802 1.78326 2
2.32861 2.77509 2.72325 2.67301 2.62432 257710
3.71710 3.62990 3.54595 3.46511 3.38721 3.31213 4
457971 4.45182 432948 4.21236 4.10020 3.99271 5
3
8
9
13.57771 1256110 11.65230 10.83777 10.10590 9.44665 8.85137 16
14.29187 13.16612 1216567 11.27407 10.47726 9.76322 9.12164 17
14.99203 13.75351 1265930 11.68959 10.32760 10.05909 9.37189 18
15.67846 14.32380 13.13394 12.08532 11.15812 10.33560 9.60360 19
16.35143 14.87747 13.59033 12.46221
11.46992 10.59401 9.81815 20
19.38798 18.85698 17.90014 17.01121 15.41502 14.02916 12.82115 11.76406 10.33553 10.01680 21
20.78406 19.66038 1862082 17.65805 15.03602 1445112 13.16300 12.04158 11.06124 10.20074 22
21.67568 20.45532 1933036 18.29220 16.44361 1485684 13.48857 12.30338 11.27219 10.37106 23
2256287 21.24339 20.03041 18.91393 1693554 15.24696 13.79864 12.55036 1146033 10.52876 24
23.44564 2202316 20.71961 19.52346 17.41315 15.62208 14.09394 12.78336 11.65358 10.67478 25
10
24.32402 2279520 21.39863 20.12104 17.87684 15.98277 14.37519 13.00317 11.32578 10.30996 26
25.19803 23.55961 22.06762 20.70690 18.32703 16.32959 14.64303 13.21053 11.98671 10.93516 27
26.06769 2431644 22.72672 21.28127 18.76411 16.66306 14.39813 13.40616 12.13711 11.05108 23
26.93302 25.06379 23.37608 21.84438 19.18845 16.98371 15.14107
27.79405 25 80771 24.01584 2239646 19.60044 17.29203 1537245
13.59072 12.27767 11.15841 29
13.76483 12.40904 11.25778 30
23.65080 2654229 24.64615 2293770 20.00043 1758849 1559281 13.92909 12.53181 1134980 31
29.50328 27.26059 25.26714 23.46833 20.38877 17.37355 15.30268 14.08404 12.64656 11.43500 32
30.35153 27.98969 25.37895 23.98856 20.76579 18.14765 16.00255 14.23023 1275379 11.51399 33
31.19555 28.70267 26.43173 24.49859 21.13184 18.41120 16.19290
3203537 29.40858 27.07559 24.99862 21.43722 18.66461 16.37419 14.49825 1294767 11.65457 35
3287102 30.10751 27.66068 25.48884 21.83225 18.90828 16.54635 14.62099 13.03521 11.71719 36
14.36814 1285401 11.58693 34
15% 16% 17% 18% Periods
0.86057 0.86207 0.85470 084746
11% 12% 13% 14%
0.90090 0.89286 0.88496 0.87719
1
1.71252 1.69005 1.66810 1.64666 1.62571 1.60523 1.58521 1.56564 2
2.44371 240183 2.36115 2.32163 228323 2.24589 2.20958 217427 3
2.97447 2.91371 2.85498 2.79818 274324 269006 4
3.51723 3.43308 3.35216
3.27429 3.19935 3.12717 5
3.99755 3.88867 3.78448 3.68474 3.58918 3.49760 6
4.71220 4.36376 4.42261 4.28830 4.16042 4.03857 3.92238 3.81153 7
5.14612 4.96764 4.79877 4.63886 4.48732 4.34359 4.20716 4.07757 8
5.53705 5.32825 5.13166 4.94637 4.771.58 4.60654 4.45057 4.30002
641766614457 5.88923 5.65022 5.42624 521612 501877 4.83323 4.65860 4.49409
3.10245 3.03735
3.69590 3.60478
4.48592 4.35526 4.23054 4.11141
5.03295 4.86842
5.53482 5.33493
5.99525 5.75902
9
680519 649506 620652 5.93770
7.16073 6.81369 6.49236 6.19437
7.48690 7.10336
7.78615 7.36669
8.06069 7.60608
11
12
5.68674 5.45273 5.23371 5.02864 4.83641 4.65601
5.91765 5.66029 542062 5.19711 4.98839 4.79322
6.74987 6.42355 6.12181 5.84236 5.58315 5.34233 5.11828 4.90951
6.98187 6.62817 6.30049 6.00007 5.72448 546753 5.22930 5.00806
7.19087 681086 646238 6.14217 584737 557546 5.32419 5.09158 15
13
14
9.29224 864869 807507
944243 8.77154 8.17574
10
8.31256 7.82371 7.37916 6.97399
8.54363 8.02155 754879 7.11963
7.24967
7.36578 6.93797 6.55037 6.19823 5.87746 5.58449 5.31624 19
5.92884 5.62777 5.35275 20
6.60388 6.26506 5.95423 5.66850 5.40529 5.16235 16
6.72909 6.37286 6.04716 5.74870 547461 5.22233 17
6.83991 6.46742 6.12797 5.81785 5.53385 5.27316 18
8.75563 8.20141 7.70162
8.95011 836492 783929
9.12855 8.51356 7.96333
7.46944 7012475 6.62313 6.25933
7.56200 7.10155 6.68696 6.31246 5.97314 5.66476 5.38368 21
7.64465 7.16951 6.74294 6.35866 601133 5.69637 5.40990 22
9.58021 888322 8.26643 7.71843 7.22966 6.79206 6.39884 604425 5.72340 543212 23
9.70661 898474 8.34814 7.78432 7.28288 683514 6.43377 6.07263 5.74649 5.45095 24
7.84314 732998 6.87293 646415
9.82258 9.07704 842174
6.09709 5.76623 546691 25
9.92897 9.16095
8.48806 7.89566 737167 6.90608 6.49056 6.11818 5.78311 5.48043 26
10.00658 9.23722 8.54780 7.94255 7.40856 6.93515 6.51353 6.13636 5.79753 5.49189 27
10.11613 9.30657 8.60162
8.60162 7.98442 7.44120 6.96066 6.53351 6.15204 5.80985 5.50160
10.19828 9.36961 8.65011 8.02181 7.47009 6.98304 6.55088 6.16555 5.82039 5.50983 29
EMEL
6.56598 6.17720 5.82939 5.51681
28
10.27365 9.42691 8.69379
8.05518 7.49565 7.00266
30
31
32
10.34280 947901 8.73315 8.08499 7.31828 7.01988 657911 6.18724 5.83709 5.52272
10.40624 9.52638 8.76860 8.111.59 753830 7.05498 659053 6.19590 5.84366
5.52773
10.46444 9.56943 880054 8.13535 755602 7.04823 6.60046 6.20336 5.84928 553197 33
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
621534 5.85820 5.53862 35
10.61176 9.67651 887859 8.19241 7.59785 7.07899
7.07899 6.62314 6.22012 5.86171 5.54120 36
34
36](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F128a1981-67b4-46d9-9fae-0a17917a39e7%2F3131d94a-dfa0-4a41-8035-ac3aad93981b%2Fkxeh7mu_processed.jpeg&w=3840&q=75)
Transcribed Image Text:TABLE 12-2 Present Value (Amount) of an Ordinary Annuity of $1
Periods
1
2
3
4
5
6
7
8
9
10
11
12
1.3
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
1%
0.99502 0.99010
TABLE 12-2 Present Value (Amount) of an Ordinary Annuity of $1 (Continued)
Periods 9% 10%
0.91743 0.90909
1
1.75911 1.73554
2.53129 2.48685
3.23972 3.16987
3.88965 3.79079
25
The values in Table 12-2 were generated by the formula+and rounded to five decimal places, where i is the interest
*(1 +0
rate per period and is the total number of periods.
26
27
28
29
30
← 2%
0.98522 0.98039
1.98510 1.97040 1.95588 1.94156
2.97025 2.94099 2.91220 2.38388
3.55050 3.90197 3.85438 3.80773
4.92587 4.85343 4.78264 4.71346
31
32
33
6
5.89638 5.79548 5.69719 5.60143 541719 5.24214 5.07569 4.91732 4.76654 4.62288 9
6.86207 6.72319 6.50821 6.47199 6.23023 6.00205 5.78637 5.58238 5.38029 5.20637
7
7.82296 7.65168 7.48593 732548 7.01969 673274 646321 6.20979 5.97130 5.74664
8.77905 3.56602 3.36052 3.16224 7.78611 743533 7.10782 6.80169 6.51523 624589
9.73041 9.47130 9.22218 8.98259 8.53020 8.11090
7.72171 7.36009 7.02358 671008
8.11090 7.72173
15.33993 14.71787
16.25863 15.56225
17.17277 16.39827
18.08236 17.22601
18.98742 18.04555
14.13126
14.90765
15.67256
1642617
17.16864
11
8.86325
1067708 10.36763 10.07112 9.78685 9.25262 8.76048 8.30541 7.83687 7.49867 7.13306
11.61898 11.25508 10.90751 10.57534 9.95400 9.38507
8.38384 7.94269 7.53608 12
1255615 1213374 11.73153 11.34837 10.63496 9.98565 9.30357 8.85258 8.35765 7.90378 13
13.48871 13.00370 1254338 1210625 11.29607 10.56312 9.89864 9.29498 8.74547
8.74547 8.24424 14
14.41662 13.86505 13.34323 1284926 11.93794 11.11839 10.37966 9.71225 9.10791 8.55948 15
3% 4% 5% 6% 7% 8% Periods
0.97087 0.96154 0.55238 0.94340 0.93458 0.92593 1
1.91347 1.85509 1.85941 1.83339 1.80802 1.78326 2
2.32861 2.77509 2.72325 2.67301 2.62432 257710
3.71710 3.62990 3.54595 3.46511 3.38721 3.31213 4
457971 4.45182 432948 4.21236 4.10020 3.99271 5
3
8
9
13.57771 1256110 11.65230 10.83777 10.10590 9.44665 8.85137 16
14.29187 13.16612 1216567 11.27407 10.47726 9.76322 9.12164 17
14.99203 13.75351 1265930 11.68959 10.32760 10.05909 9.37189 18
15.67846 14.32380 13.13394 12.08532 11.15812 10.33560 9.60360 19
16.35143 14.87747 13.59033 12.46221
11.46992 10.59401 9.81815 20
19.38798 18.85698 17.90014 17.01121 15.41502 14.02916 12.82115 11.76406 10.33553 10.01680 21
20.78406 19.66038 1862082 17.65805 15.03602 1445112 13.16300 12.04158 11.06124 10.20074 22
21.67568 20.45532 1933036 18.29220 16.44361 1485684 13.48857 12.30338 11.27219 10.37106 23
2256287 21.24339 20.03041 18.91393 1693554 15.24696 13.79864 12.55036 1146033 10.52876 24
23.44564 2202316 20.71961 19.52346 17.41315 15.62208 14.09394 12.78336 11.65358 10.67478 25
10
24.32402 2279520 21.39863 20.12104 17.87684 15.98277 14.37519 13.00317 11.32578 10.30996 26
25.19803 23.55961 22.06762 20.70690 18.32703 16.32959 14.64303 13.21053 11.98671 10.93516 27
26.06769 2431644 22.72672 21.28127 18.76411 16.66306 14.39813 13.40616 12.13711 11.05108 23
26.93302 25.06379 23.37608 21.84438 19.18845 16.98371 15.14107
27.79405 25 80771 24.01584 2239646 19.60044 17.29203 1537245
13.59072 12.27767 11.15841 29
13.76483 12.40904 11.25778 30
23.65080 2654229 24.64615 2293770 20.00043 1758849 1559281 13.92909 12.53181 1134980 31
29.50328 27.26059 25.26714 23.46833 20.38877 17.37355 15.30268 14.08404 12.64656 11.43500 32
30.35153 27.98969 25.37895 23.98856 20.76579 18.14765 16.00255 14.23023 1275379 11.51399 33
31.19555 28.70267 26.43173 24.49859 21.13184 18.41120 16.19290
3203537 29.40858 27.07559 24.99862 21.43722 18.66461 16.37419 14.49825 1294767 11.65457 35
3287102 30.10751 27.66068 25.48884 21.83225 18.90828 16.54635 14.62099 13.03521 11.71719 36
14.36814 1285401 11.58693 34
15% 16% 17% 18% Periods
0.86057 0.86207 0.85470 084746
11% 12% 13% 14%
0.90090 0.89286 0.88496 0.87719
1
1.71252 1.69005 1.66810 1.64666 1.62571 1.60523 1.58521 1.56564 2
2.44371 240183 2.36115 2.32163 228323 2.24589 2.20958 217427 3
2.97447 2.91371 2.85498 2.79818 274324 269006 4
3.51723 3.43308 3.35216
3.27429 3.19935 3.12717 5
3.99755 3.88867 3.78448 3.68474 3.58918 3.49760 6
4.71220 4.36376 4.42261 4.28830 4.16042 4.03857 3.92238 3.81153 7
5.14612 4.96764 4.79877 4.63886 4.48732 4.34359 4.20716 4.07757 8
5.53705 5.32825 5.13166 4.94637 4.771.58 4.60654 4.45057 4.30002
641766614457 5.88923 5.65022 5.42624 521612 501877 4.83323 4.65860 4.49409
3.10245 3.03735
3.69590 3.60478
4.48592 4.35526 4.23054 4.11141
5.03295 4.86842
5.53482 5.33493
5.99525 5.75902
9
680519 649506 620652 5.93770
7.16073 6.81369 6.49236 6.19437
7.48690 7.10336
7.78615 7.36669
8.06069 7.60608
11
12
5.68674 5.45273 5.23371 5.02864 4.83641 4.65601
5.91765 5.66029 542062 5.19711 4.98839 4.79322
6.74987 6.42355 6.12181 5.84236 5.58315 5.34233 5.11828 4.90951
6.98187 6.62817 6.30049 6.00007 5.72448 546753 5.22930 5.00806
7.19087 681086 646238 6.14217 584737 557546 5.32419 5.09158 15
13
14
9.29224 864869 807507
944243 8.77154 8.17574
10
8.31256 7.82371 7.37916 6.97399
8.54363 8.02155 754879 7.11963
7.24967
7.36578 6.93797 6.55037 6.19823 5.87746 5.58449 5.31624 19
5.92884 5.62777 5.35275 20
6.60388 6.26506 5.95423 5.66850 5.40529 5.16235 16
6.72909 6.37286 6.04716 5.74870 547461 5.22233 17
6.83991 6.46742 6.12797 5.81785 5.53385 5.27316 18
8.75563 8.20141 7.70162
8.95011 836492 783929
9.12855 8.51356 7.96333
7.46944 7012475 6.62313 6.25933
7.56200 7.10155 6.68696 6.31246 5.97314 5.66476 5.38368 21
7.64465 7.16951 6.74294 6.35866 601133 5.69637 5.40990 22
9.58021 888322 8.26643 7.71843 7.22966 6.79206 6.39884 604425 5.72340 543212 23
9.70661 898474 8.34814 7.78432 7.28288 683514 6.43377 6.07263 5.74649 5.45095 24
7.84314 732998 6.87293 646415
9.82258 9.07704 842174
6.09709 5.76623 546691 25
9.92897 9.16095
8.48806 7.89566 737167 6.90608 6.49056 6.11818 5.78311 5.48043 26
10.00658 9.23722 8.54780 7.94255 7.40856 6.93515 6.51353 6.13636 5.79753 5.49189 27
10.11613 9.30657 8.60162
8.60162 7.98442 7.44120 6.96066 6.53351 6.15204 5.80985 5.50160
10.19828 9.36961 8.65011 8.02181 7.47009 6.98304 6.55088 6.16555 5.82039 5.50983 29
EMEL
6.56598 6.17720 5.82939 5.51681
28
10.27365 9.42691 8.69379
8.05518 7.49565 7.00266
30
31
32
10.34280 947901 8.73315 8.08499 7.31828 7.01988 657911 6.18724 5.83709 5.52272
10.40624 9.52638 8.76860 8.111.59 753830 7.05498 659053 6.19590 5.84366
5.52773
10.46444 9.56943 880054 8.13535 755602 7.04823 6.60046 6.20336 5.84928 553197 33
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
621534 5.85820 5.53862 35
10.61176 9.67651 887859 8.19241 7.59785 7.07899
7.07899 6.62314 6.22012 5.86171 5.54120 36
34
36
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Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
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Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
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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