Each year for the next 10 years, Carmen Lector will deposit $4,000 into an investment fund that pays 8% compounded annually
a. What is the present value of those investment payments if the first of 40 deposits are made at the end of each year?
b. What is the present value of those investment payments if the first of 40 deposits are made at the beginning of each year?
What will be an ideal response?
Answer:
a. $4,000 × 6.71008 (present value of an ordinary annuity at 8% for 10 periods) = $26,840
b. $4,000 × 7.24689 (present value of an annuity due at 8% for 10 periods) = $28,988
Business
You might also like to view...
What occurs each time an ad is displayed?
A. Impression B. Click C. Landing page D. Cost-per-click
Business
Which of the following is NOT a category for creditors in a bankruptcy proceeding?
A) preferred B) secured C) unsecured D) unregistered E) these are all categories for creditors
Business