The government has imposed a fine on the Not-So-Legal Company. The fine calls fo

Question

The government has imposed a fine on the Not-So-Legal Company. The fine calls for annual payments of $100,000, $250,000, and $250,000, respectively over the next three years. The first payment is due one year from today. The government plans to invest the funds until the final payment is collected and then donate the entire amount, including investment earnings, to a national health center. The government will earn 3.5 percent on the funds held. How much will the national health center receive three years from today? Round to the nearest cent. Do not include any unit (If your answer is $111.11, then type 111.11 without S sign.) What is the effective annual yield of 6% compounded semi-annually? Answer in the percent format. Round io i e nearest hundrelih perten . I)o tlo uncluce any unuiy f your answer is 4 36%, i hen enter 436 as your answer without % sign).

Explanation / Answer

Year Cash Flow FV @ 3.5% Future Value 1 100,000 1.071225 107,122.5 2 250,000 1.035 258,750 3 250,000 1 250,000 Total 615,872.5 FV of CF1 = $100,000 × (1+0.035)(3-1) = 107,122.5 FV of CF2 = $250,000 × (1+0.035) (3-2) 258,750 FV of CF3 = $250,000 × (1+0.035) (3-3) = 250,000 2) Effective Annual yield = [(1 + 6%/2)^2] -1 6.09% Effective Annual yield 6.09

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