Chapter B, Problem 19E

To determine

Time Value of Money:

The value of the money changes with the change in time. If an individual deposits his savings in the bank then, the amount will increase at the specified interest rate. But if he invests that same amount in different avenues then he may get loss or more profit.

Future Value:

The future value is that value of an investment which will be realizable in future. When amount is invested today at a specific rate, its future value will be more than the present value of money invested.

Present Value:

Present value is that value of money which measures the worth of a future amount in today’s value adjusted for interest and inflation. It is used in finance for the valuation of future value, stock and bond pricing.

Annuity:

An annuity refers to a series of fixed cash flows, received or paid by a person at a specific frequency. These cash flows occur for a specified period of time.

a.

To identify: The amount that would need to deposit only one-time.

b.

To determine

To identify: The semi-annual deposit amount.

c.

To determine

To analyze: The retirement value.

d.

To determine

To identify: The better option between the two.