1.) You purchased an immediate annuity which pays you $3,000 each year from next
ID: 2384119 • Letter: 1
Question
1.) You purchased an immediate annuity which pays you $3,000 each year from next year for 15 years. Assuming interest rate is 5%, how much is the equivalent present value of these payments?
2.) Which of the following statements is correct?
a. At the same 4% annual interest rate, the future value of $1,000 in 5 years is higher than the future value of $1,000 in 6 years.
b. Future value is the equivalent amount you receive today for an amount you are going to receive at some future period.
c. At 4% annual interest rate, the present value of $1,000 you expect to receive 5 years from now is $1,000.
d. Present value is the equivalent amount you receive today for an amount you are going to receive at some future period.
3.) The future value of $1,000 saved for 20 years at 5% interest is:
PLEASE SHOW WORK
Explanation / Answer
Ans
Ans 2
Ans 3
Year Annuity PVDF Present Value of Annuity Y1 3,000.00 1.00 3,000.00 Y2 3,000.00 0.95 2,857.14 Y3 3,000.00 0.91 2,721.09 Y4 3,000.00 0.86 2,591.51 Y5 3,000.00 0.82 2,468.11 Y6 3,000.00 0.78 2,350.58 Y7 3,000.00 0.75 2,238.65 Y8 3,000.00 0.71 2,132.04 Y9 3,000.00 0.68 2,030.52 Y10 3,000.00 0.64 1,933.83 Y11 3,000.00 0.61 1,841.74 Y12 3,000.00 0.58 1,754.04 Y13 3,000.00 0.56 1,670.51 Y14 3,000.00 0.53 1,590.96 Y15 3,000.00 0.51 1,515.20Related Questions
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