1. Calculate the amount needed to buy a 7%, 4-year annuity to receive $200,000 per year.

Required:

1. By successive computations, using the Present Value of $1 table below. You must show your work.

2. By a single computation using the Present Value of an Annuity of $1 table below. You must show your work.

Note: The two answers will not come out exactly the same but should be close (within 12 percent).