Question
Apollo Enterprises has been awarded an insurance settlement of $4,000 at the end of each 6 month period for the next 14 years. (Round your
Apollo Enterprises has been awarded an insurance settlement of $4,000 at the end of each 6 month period for the next 14 years. (Round your answers to the nearest cent.)
(a)
As the accountant, calculate how much (in $) the insurance company must set aside now at 6% interest compounded semiannually to pay this obligation to Apollo.
$
(b)
How much (in $) would the insurance company have to invest now if the Apollo settlement was changed to $2,000 at the end of each 3 month period for 14 years and the insurance company earned 8% interest compounded quarterly?
$
(c)
How much (in $) would the insurance company have to invest now if the Apollo settlement was paid at the beginning of each 3 month period rather than at the end?
$
Solve by using the sinking fund or amortization formula. (Round your answer to the nearest cent.) Sinking fund payment (in $) $ Sinking Fund Payment X Payment Frequency every 3 months Time Period (years) 3 Nominal Rate (%) 6.0 Interest Compounded quarterly Future Value (Objective) $7,000
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