a Assume that you are saving for a trip to several countries that you and three of your college friends are planning to take 5 years after graduation. You want to save $15,000 for the trip. Assume that you will make deposits at the end of each quarter for 5 years in an investment that earns 8% compounded quarterly. How much must you invest each quarter to reach your goal? Show your calculation. Page Sio Assume you are to receive $1.000 cash on cach December 31 for three years: 2018, 2019, and 2020. How much would the sum of these three $1.000 future amounts be worth on January 1, 2018, assuming an interest rate of 10 perccat per year! One way to determine this is to use Table 11-2A to calculate the present value of each single amount as follows:

FACTOR FIMM TARIK 11.20 Year Aiman i = 10%. Presle 1 S. 0.909) $ 09.10 2 $1.000 0.8264-2) $26.40 3 $1,1 0.7511 In - 33 750.30 Tocal persent value - $2.455.80 Alternatively, we Con Compute the present value of this annuity more casily by using Table 11-4A as follows: TABLE 11-4A Present Value of Annulty or $1 Periods 2% 39 . 3.75% AN 11 5 6 7 1 0.9804 0.9 0.969 0.9615 1.9592 1.9524 0.9614 0.9340 0.9259 2 1946 1.9135 1.8929 1.8561 1.6794 1.8591 L.834 L8080 1.7833 3 28630 2,826 2.7883 2.7751 2.7670 2.7212 1.6710 26243 2.5771 3 1.8023 3.711 1.6514 3.6199 3.MISS 1.4651 ..382 3.3121 5 4:135 4.4515 4.4201 4.3295 4.2124 4.1002 3.9927 6 56014 5.4172 5.2851 5.2421 5.1997 5.0757 4.9173 4.7663 4.6229 7 64730 6.3 f0579 0021 5,0470 5.7164 5.5824 5.1991 5.2014 8 0.3255 2.0197 6.8028 6.2.17 6.6639 6.4532 6.2095 5.9213 5.2456 9 81622 2.2951 7.5205 2.05) 7.3512 7.1075 6.2017 6.5152 6.2469 10 8.9826 8.5332 8.212B 8.1109 3.0]09 77217 1.3601 70236 6.7101 2n 163514 14.8775 11.8962 11.5901 13.2944 12.4611 11.4699 10.59401 9.8161 ID 8.9826 X.5702 8.2128 8.1109 80109 7.7213 2.1 3.0236 6.7101 30 16.3514 14.8275 13.8962 13.5904 13.29444 12.4622 114699 ID 5940 9.815 Periods 9% 11% 12% 138 14% 15% 20% ZS% 1 0.9174 11.9091 0.9009 0.8929 0.8550 0.8972 (1.8696 1.8333 (IXCH ) 2 1.7591 1.7355 1.2125 16901 16681 L6467 16257 15228 1.4400 25313 2.4869 2.4437 2.4018 23612 2.3216 2.2832 2.3055 1.9520 4 3.2397 3.1999 3.1024 30973 2.9745 2.9132 2.8550 25887 2.3616 5 3.8899 3.7908 3.6959 3.6048 3.5172 3.4331 3.3522 29906 2.6893 6 4.4859 4.3553 4.2305 4.1114 3.9975 3.8887 3.7845 3.3255 2.9514 7 5.0330 4.8684 4.7122 4.5638 4.4226 4.2883 4.1604 3.6046 3.1611 8 5.5348 5.3349 5.1461 4.9676 4.7988 4.6399 4.4873 3.8372 3.3289 9 5.9952 5.7590 5.5170 13282 5.1317 4.9464 4.7716 4.0.710 1.46.1 10 6.4172 6.1446 5.8892 5.6502 5.4262 5261 5015 4.1925 3.5705 30 9.1285 8.5136 7.96.43 7.4694 3.024 6.623 6.2593 4.8596 3.9529 *There is one payment cach period. COACH'S TIP Present value of $1 annuity at 10% for 3 years = 2.4869 $1,000 x 2.4569 = $2,487 (rounded) You should be indifferent toward receiving $2,487 today or receiving $1,000 at the end of each of the next 3 years