Mr. Fish wants to build a

house in 8 years. He estimates that the total cost will be $150,000. If he can

put aside $10,000 at the end of each year, what rate of return must he earn in

order to have the amount needed? 

Dr. J. wants to buy a Dell

computer which will cost $3,000 three years from today. He would like to set

aside an equal amount at the end of each year in order to accumulate the amount

needed. He can earn 8% annual return. How much should he set aside? 

Ambrin Corp. expects to

receive $2,000 per year for 10 years and $3,500 per year for the next 10 years.

What is the present value of this 20 year cash flow? Use an 11% discount

rate. 

Pedro Gonzalez will invest

$5,000 at the beginning of each year for the next 9 years. The interest rate is

8 percent. What is the future value? 

Sharon Smith will receive

$1 million in 50 years. The discount rate is 14%. As an alternative, she can

receive $1,428.09610 today. Which should she choose? 

Lou Lewis borrows $10,000

to be repaid over 10 years at 9 percent. Repayment of principal in the first

year is: 

To save for her newborn

son's college education, Lea Wilson will invest $1,000 at the beginning of each

year for the next 18 years. The interest rate is 12 percent. What is the future

value? 

As the time period until

receipt increases, the present value of an amount at a fixed interest rate

As the interest rate

increases, the present value of an amount to be received at the end of a fixed

period

An annuity may be defined

as