0
2.
14,00
0
8
12
$
3.
25,00
0
12
20
$
4.
40,00
0
10
8
$
Explanation:
1. PV = $20,000 (.50835*) = $10,167
*Present value of $1: n = 10, i = 7% (from Table 2)
2. PV = $14,000 (.39711*) = $5,560
*Present value of $1: n = 12, i = 8% (from Table 2)
3. PV = $25,000 (.10367*) = $2,592
*Present value of $1: n = 20, i = 12% (from Table 2)
4. PV = $40,000 (.46651*) = $18,660
*Present value of $1: n = 8, i = 10% (from Table 2)
Exercise 6-10 Future value; solving for annuities and single amount [LO4, 8]
John Rider wants to accumulate $100,000 to be used for his daughter’s college education. He
would like to have the amount available on December 31, 2016. Assume that the funds will
accumulate in a certificate of deposit paying 8% interest compounded annually.
Answer each of the following independent questions.
Required:
(1
)
If John were to deposit a single amount, how much would he have to invest on December 31,
2011? (Use
Table 2
)
(Round "PV Factor" to 5 decimal places and final answer to the
nearest dollar amount. Omit the "$" sign in your response.)
PV
$
(2
)
If John were to make five equal deposits on each December 31, beginning on December 31,
2012, what is the required deposit? (Use
Table 3
)
(Round "FV Factor" to 4 decimal places
and final answer to the nearest dollar amount.Omit the "$" sign in your response.)