Use the table in the hanbook. Given an annuity due of 5,000, 12% semiannually fo

Question

Use the table in the hanbook. Given an annuity due of 5,000, 12% semiannually for three years, what is the value of the investment at the end of three years?

Rita Hect wants to receive $4,200 each year for 15 years. Have much Rita invest today at 5% compounded annually?

Jim Hunter has decided to retire to Florida in 10 years. What amount should Jim invest today so that he will be able to withdraw 25, 000 at the end of each year for 30 years after he retires? Assume he can invest money at 9% interest cinounded annually.

Explanation / Answer

1. a= p(1 + r/200)^2n

      = 5000 (1 + 12/200)^(2X3) = 5000 x 1.4185 = 7092.5

va;ue of investment at the end of three years = 7092.5

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