Exam2_Fall2010

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Easy Shengnan receives an annuity that pays him \$1 , 000 every 2 years for a total of 10 payments. The ﬁrst payment is in two years and the annual interest rate is 7 . 5%. Find the present value of this annuity. Suppose that Xiao receives a perpetuity paying him \$ Q every year but the ﬁrst payment is not for 15 years. The present value of this arrangement is \$40 and the annual interest rate is 5%. What is his annual payment?
Moderate A very rich man purchases a perpetuity-due and donates the payments to three charities A, B, and C. For the ﬁrst 20 years A and B receive equal shares of the payments. The remaining payments all go to C thereafter. What is the annual interest rate if the present value of payments received by A, B, and C are the same?

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Payments of \$5 , 000 are made into a fund at the beginning of each year for 10 years earning interest at an annual rate of i . The interest earned each year is then reinvested
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