a. What is the future value of a five-year ordinary annuity with annual payments

Question

a. What is the future value of a five-year ordinary annuity with annual payments of $200, evaluated at a 15 percent interest rate?

b. What is the future value of a $100 lump sum invested for five years in an account paying 10 percent interest?

c. What is the approximate number of years it would take for an investment to double if the rate of return (interest) is 5 percent?

d. Assume that John Richards pays income taxes at a 30 percent rate. He currently owns a not-for-profit (municipal) bond that pays 5 percent interest. What interest rate would have to be set on a for-profit (corporate) bond to produce the same amount of usable (after-tax) income?

Explanation / Answer

a. 1348.47

b. 161.05

c. 14.20 years

d. 7.142%

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.