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present value of a 3-year ordinary annuity

1. What is the present value of a 3-year ordinary annuity of $130 if the discount rate is 6% and if you have to wait 2 years instead of 1 year for the first payment? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

2. Today is January 1. Starting today, Sam is going to contribute $140 on the first of each month to his retirement account. His employer contributes an additional 50% of the amount contributed by Sam. If both Sam and his employer continue to do this and Sam can earn a monthly rate of ½ of 1 percent, how much will he have in his retirement account 35 years from now? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

3. You are considering two insurance settlement offers. The first offer includes annual payments of $5,000, $7,500, and $10,000 over the next three years, respectively. The other offer is the payment of one lump sum amount today. You are trying to decide which offer to accept given the fact that your discount rate is 5%. What is the minimum amount that you will accept today if you are to select the lump sum offer? (Do not round intermediate calculations. Round your answer to 2 decimal places.

 

4. What is the value of a perpetuity that pays $100 every 3 months forever? The discount rate quoted on an APR basis is 5.5%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

5. Old Time Savings Bank pays 5% interest on its savings accounts compounded annually. If you deposit $1,700 in the bank and leave it there, how much interest will you earn in the tenth year? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

 

6. What is the present value of a 3-year ordinary annuity of $130 if the discount rate is 6% and if you have to wait 2 years instead of 1 year for the first payment? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

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