1. 1. Given that the $10,000 payments are equal in amount, will be made at the same time each semi-annual period, and will be discounted at the same interest rate each period, the payments can be described:

A. annuity

B. Present value

C. future value

2. Which table would you rely on to find out what the $10,000 payments are worth in 2037?

A. Present Value of $1. B. Present Annuity Value of $1 C. Future Value of $1. D. Future Annuity Value of $1

3. What interest rate and period would you look up on this table?

A. 8% for 15 periods. B. 8% for 30 periods. C. 4% for 15 periods. D. 4% for 30 periods

4. What is the value of the $10,000 payments at the start of your retirement (i.e. in 2037)?

A. 85,594.50 B. 112,577.80 C. 111,183.90 D. 172,920.30

5. Given your answer to #4, you now know what the payments are worth in 2037. However, what you really want to know, is what the amount from #4 will be worth today, in 2017. Which table would your rely on to find out what the value from #4 above is worth in 2017?

A. Present Value of $1. B. Present Annuity Value of $1 C. Future Value of $1. D. Future Annuity Value of $1

6. If youre looking for a factor representing 20 periods (i.e. 20 years), what interest rate would you look up on this table?

A. 16% B.8% C.4% D.2%

7. If you rely on the table from #5 and the factor obtained through information in #6, what is todays value (i.e. in 2017) of the amount in #4?

A. 18,364.36 B. 37,100.05 C. 78,919.10 D. 1,697,757.44

info before #8: This number represents what the $10,000 payments during your retirement are worth to you now (in 2017). Companies offering pension programs have to make and record similar estimates (as liabilities) every year. Notice that this means they also have to estimate when their employees will retire as well as how long they will live during retirement.

8. Which of the following best describes this problem?

A. Calculation of present value annuity. B. Calculation of present value of a single sum. C. A two step calculation of present value of an annuity and single sum. D. A two step calculation of future value of an annuity and single sum.

9. If you end up living longer than the 15 years of retirement you initially expected, how will that affect the number you found in #7?

A. will decrease B. stay the same. C. will increase

10. Which would you prefer, $10,000 semi-annual payments during retirement as described above, or, instead, being paid $20,000 every year during your retirement?

A. $10,000 semi-annual payments, they're worth more. B. annual $20,000 payments, they're worth more. C. No preference because there is no difference in the present value of these two options. D. No preference because there is no difference in the future value of these two options.

Assume that you've worked for the same company for the past 15 years and this company offers its employees a pension plan. This plan guarantees that, as soon as you retire, you will receive a specific amount of money every six months until you die. Today you find out that the amount you will receive is $10,000. You don't plan on retiring for another 20 years, but would like to know what these payments are worth to you now. Having taken ACCT 2101 you know that the value of $10,000 twenty years from now is not the same as if you received $10,000 now. You expect your retirement period to last a good 15 years. If the interest rate on these payments is 8%, what are they worth to you today? To answer this question it may help to consider the timeline below: 2017 2037 2052 RIP Day you Retire Today s10,000 paid in pension every six months for 15 years To determine today's value of the $10,000 payments that will begin in 2037, rely on the following steps (and answer related questions as you progress along)