1. The factor used to compute the present worth of a future sum of money using a
ID: 3159134 • Letter: 1
Question
1. The factor used to compute the present worth of a future sum of money using an interest rate
of 5% per year and a 10-year investment period is most nearly
a. 0.31
b. 0.41
c. 0.51
d. 0.61
e. 0.71
2. A loan used to finance a project will be paid in 8 years. The annual payment is $1,200 at the
end of first year; however, this amount is increased by $200 every year for the subsequent
years. At an interest rate equal to 4% per year, the uniform series equivalent annual end of
period payment is most nearly
a. $1,860
b. $1,200
c. $200
d. $2,240
e. $1,480
3. An obligation in an amount equal to $25,000 is due in 10 years, about how much per year we
should invest at 4% per year interest to pay off the obligation?
a. $1,282
b. $1,482
c. $1,682
d. $1,882
e. $3,082
Explanation / Answer
1.
That factor is given by
Discount factor = 1/(1+i)^t
As i = 0.05, t = 10,
Discount factor = 1/(1+i)^t = 1/(1+0.05)^10 = 0.613913254 = 0.61 [ANSWER, D]
*******************************************
Hi! Please submit the next part as a separate question. That way we can continue helping you! Please indicate which parts are not yet solved when you submit. Thanks!
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.