annuities practice problem set 2 - isu-prof.com（年金练习习题2 - isu-prof.com）.pdf

Annuities Practice Problem Set 2 Future Value of an Annuity 1 1. On January 1, 2010, you put $1000 in a savings account that pays 6 % interest, and you will do 4 this every year for the next 18 [note this correction from the original problem] years withdraw the balance on December 31, 2028, to pay for your child鈥檚 college education . How much will you withdraw? (1 + .0625)18 鈭 1 $1000 脳 . 0625 Present Value of an Annuity 2. On January 1, 2010, you win a lottery with a payoff of $2500 at the end of every year for the next 10 years. If you discount the cash flow at 7.8%, what is the least amount you will accept as a single payment right now, instead? 1 鈭 (1 + .078)鈭?0 $2500 脳 . 078 Future Value of an Annuity Due 3. Suppose in Problem #1, above, you deposited the payments on the last day of each year instead of the first (so you would deposit your last payment on December 31, 2028, then take all the money out the same day)? How much will you withdraw in this case? (1 + .0625)17 鈭 1 $1000 脳 + $1000 . 0625 Present Value of an Annuity Due 4. Suppose in Problem #2, above, you receive your first payment right away. What is the minimum