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Unformatted text preview: = $11,969.50 + $5,000 X 7.60608 = 38,030.40 $49,999.90 The answer should be $50,000; the above computation is off by 10 due to rounding. (c) $50,000 X .18270 = $ 9,135.00 + $5,000 X 6.81086 = 34,054,30 $43,189.30 EXERCISE A17 (1520 minutes) (a) i = 8% PV = $1,000,000 FV = $1,999,000 0 1 2 n = ? FVF( n, 8% ) = $1,999,000 $1,000,000 = 1.999 reading down the 8% column, 1.999 corresponds to 9 periods. (b) By setting aside $300,000 now, Scottie can gradually build the fund to an amount to establish the foundation. PV = $300,000 FV = ? 0 1 2 8 9 FV = $300,000 (FVF 9, 8% ) = $300,000 (1.999) = $599,700Thus, the amount needed from the annuity: $1,999,000 $599,700 = $1,399,300. $? $? $? FV = $1,399,300 0 1 2 8 9 Payments = FV (FVOA 9, 8% ) = $1,399,300 12.48756 = $112,055.52....
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 Winter '09
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