Question
14 Your rich aunt has promised to give you $5,000 per year at the end of each of the next four years to help you
14 Your rich aunt has promised to give you $5,000 per year at the end of each of the next four years to help you pay for college. Using a discount rate of 7%, what is the present value of the gift. If the JPEG file doesn't open, Appendix A in your book has full Present Value tables. PV-Tables-Lump-Ann.JPG $4,278 $12,411 $20,000 $16,935 Table A-1 Present Value of $1 Preser Periods 1% 2% 3% 4% 5% 6% 7% 1 0.990 0.980 0.971 0.962 0.952 0.943 0.935 2 0.980 0.961 0.943 0.925 0.907 0.890 0.873 3 0.971 0.942 0.915 0.889 0.864 0.840 0.816 4 0.961 0.924 0.888 0.855 0.823 0.792 0.763 0 5 0.951 0.906 0.863 0.822 0.784 0.747 0.713 o 00000 68819 0.942 0.888 0.837 0.790 0.746 0.705 0.666 7 0.933 0.871 0.813 0.760 0.711 0.665 0.623 o 10 0.923 0.853 0.789 0.914 0.837 0.766 0.905 0.820 0.744 0.731 0.677 0.627 0.582 0.703 0.645 0.592 0.544 0.676 0.614 0.558 0.508 00000 o Table A-2 Present Value of Ordinary Annuity of $1 Pre Periods 1% 2% 3% 4% 5% 6% 7% 1 0.990 0.980 0.971 0.962 0.952 0.943 0.935 2 1.970 1.942 1.913 1.886 1.859 1.833 1.808 3 2.941 2.884 2.829 2.775 2.723 2.673 2.624 4 3.902 3.808 3.717 3.630 3.546 3.465 3.387 5 4.853 4.713 4.580 4.452 4.329 4.212 4.100 10 11 6089OE: 5.795 5.601 5.417 5.242 5.076 4.917 4.767 7 6.728 6.472 6.230 6.002 5.786 5.582 5.389 7.652 7.325 7.020 6.733 6.463 6.210 5.971 8.566 8.162 7.786 7.435 7.108 6.802 6.515 9.471 8.983 8.530 8.111 7.722 7.360 7.024 10.368 9.787 9.253 8.760 8.306 7.887 7.499
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