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Contemporary Mathematics for Business and Consumers 7th Edition by Robert Brechner ,George Bergeman
Edition 7ISBN: 978-1285448596Contemporary Mathematics for Business and Consumers 7th Edition by Robert Brechner ,George Bergeman
Edition 7ISBN: 978-1285448596 Exercise 77
Present value of an annuity due
Apollo Enterprises has been awarded an insurance settlement of $5,000 at the end of each 6-month period for the next 10 years.
a. As the accountant, calculate how much the insurance company must set aside now at 6% interest compounded semiannually to pay this obligation to Apollo.
b. How much would the insurance company have to invest now if the Apollo settlement was changed to $2,500 at the end of each 3-month period for 10 years and the insurance company earned 8% interest compounded quarterly?
c. How much would the insurance company have to invest now if the Apollo settlement was paid at the beginning of each 3-month period rather than at the end?
Apollo Enterprises has been awarded an insurance settlement of $5,000 at the end of each 6-month period for the next 10 years.
a. As the accountant, calculate how much the insurance company must set aside now at 6% interest compounded semiannually to pay this obligation to Apollo.
b. How much would the insurance company have to invest now if the Apollo settlement was changed to $2,500 at the end of each 3-month period for 10 years and the insurance company earned 8% interest compounded quarterly?
c. How much would the insurance company have to invest now if the Apollo settlement was paid at the beginning of each 3-month period rather than at the end?
Explanation
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To calculate the present value of an ord...
Contemporary Mathematics for Business and Consumers 7th Edition by Robert Brechner ,George Bergeman
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