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

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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

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

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