quiz 7 answers

quiz 7 answers - The point distribution for Quiz 7 is 2...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
other questions. 1. Kimberly Ford invested $10,000 10 years ago at 16 percent, compounded quarterly. How much has she accumulated? 10,000 ´ FVIF(4%, 40) = 10,000 ´ 4.801 = $48,010 2. A professional baseball rookie has just signed a five-year contract that requires a salary of $200,000 in each of the first three years and $400,000 in the latter two years. Assuming an opportunity rate of 12%, what is the present value of the contract? 200,000 ´ PVIFA(12%, 3) + 400,000 ´ PVIFA(12%, 2) ´ PVIF(12%, 3)= 200,000 ´ 2.402 + 400,000 ´ 1.690 ´ 0.712 = $961,712 3. Mr. Bearer may choose to take a lump-sum payment of $25,292.8 now from his insurance policy or an annuity of $3,200 annually as long as he lives. How long must Mr. Bearer anticipate living for the annuity to be indifferent to the lump sum if interest rate is 8%? 25,292.8 = 3,200 ´ PVIFA(8%, n), 7.904 = PVIFA(8%, n), n = 13 years
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 5

quiz 7 answers - The point distribution for Quiz 7 is 2...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online