Question
April Stigum will receive a 25-year annuity of $10,000 annually, beginning six years from today. In other words, the first payment will be made at
April Stigum will receive a 25-year annuity of $10,000 annually, beginning six years from today. In other words, the first payment will be made at the end of year 6. Assuming a required rate of return of 6%, calculate the present value today of her annuity. (Enter a positive value and round to 2 decimals)
Joe and Sarah Fabozzi are saving for the college education of their newborn daughter (born today), Beth. The Fabozzi's estimate that college expenses will run $45,000 per year when their daughter reaches college in 18 years. In other words, the first withdrawal will be made on Beth's 18th Birthday, and the last payment will be made on Beth's 17th Birthday. The expected interest rate while saving and in college is 8%. The first deposit will be made one year from today. Calculate the annual payment the Fabozzi's must make to the account so their daughter will be supported through five years of college. (Enter a positive value and round to 2 decimals)
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