Chapter 3 section 8

# Chapter 3 section 8 - Chapter 3 number 8 43(S08T1 Kurt is...

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Chapter 3, number 8 43. (S08T1) Kurt is the beneficiary of a trust. Under the trust, he will receive payments at the end of each year for the next 20 years. The payment will be 2000 at the end of one year. Each subsequent payment will increase by 8%. In other words, the payment at the end of the second year will be 2000(1.08), the payment at the end of the third year will be 2000(1.082), etc. Calculate the present value of Kurt’s payments under the trust using an annual effective interest rate of 9%. 44. (S09T1) Parker has won the lottery. He will receive 20 annual payments with the first payment made now. The first payment will be for 25,000. Each subsequent payment will be 110% of the previous payment. In other words, the second payment will be 25000(1.10) and the third payment will be 25000(1.10)2, etc. Calculate the present value of Parker’s winnings using an annual effective interest rate of 5%. 45.

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Chapter 3 section 8 - Chapter 3 number 8 43(S08T1 Kurt is...

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