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Unformatted text preview: annuity due method would only provide $960,000 at the end of 12 years while the single lump sum method will provide $1,900,000. The interest rate on both methods would be about 9.5%. (b) 8% (c) $724,584 = 2% discount rate over 5 years (arrived by considering total return of 10% = 8% stated + 2% discount rate) (d) Target savings $1,300,000. Single sum of $200,000 @ 2.5% for 40 periods = $537,012 Rent amount of $30,394.56 @ 2.5% for 40 periods = $762,988 $1,300,000 Answer is: Rent amount of $30,394.56 at the end of each quarter for 10 years....
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