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[ 8 ] Clifford's pension fund will pay $40,000 per year for the next 5 years at the end of each year, after which the
[ 8 ] Clifford's pension fund will pay $40,000 per year for the next 5 years at the end of each year, after which the pension fund balance will be zero. The annual interest rate for the first 3 years is 3%, and the rate for the remaining 2 years is 4%. What is the current pension fund balance? Present value of 1 at 3% for 3 years: 0.915 Present value of 1 at 4% for 2 years: 0.925 Present value of an Present value of an Period(s) ordinary annuity at 3% ordinary annuity at 4% 0.97 0.96 2 1.91 1.89 3 2.83 2.78 4 3.72 3.63 5 4.58 4.45 1 A. $178,000 B. $182,374 C. $183,200 D. $188,800
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