Chapter 7 case problem 3; Snick's Board Shop The company is planning for the future and would like you to prepare a present value analysis.

a. How much thy would have to pay at the end of each year, assuming a 3 percent rate of return, to yield

$80,000 at the end of 5 years

b. How much they would have at the end of 5 years if thy invested $73,500 today. earning 3 percent per year

c. How much they would have at the end of 5 years if they invested $1850 at the end of each year, earning 3 percent per year

d. How much they would have to invest today to have $25,100 in 5 years, earning 3 percent per year.

Snick's Board Shop Ch 07-10 Present Value Analysis Annuity payment required: Future need: Term (in years): Interest rate: Investment value in future: Current investment: Interest rate: Term (in years): ($15,068.37) 80,000 5 3% ($85,206.64) 73,500 3% 5 Investment value in future: ($1,850.00) Current annuity investment: Interest rate: Term (in years): ($1,000.00) 3% 5 Invest now: 73,500 Future need: Interest rate: Term (in years): 25,100 3% 5 Year 0 1 2 3 4 5 Interest Year 0 1 2 3 4 5 Interest Year 0 1 2 3 4 5 Interest Year 0 1 2 3 4 5 Interest $425.05 $931.63 $917.66 $1,904.82 $2,205.00 $2,271.15 $2,249.28 $2,316.76 $5,664.45 $30.00 $60.90 $92.73 $2,205.00 $2,271.15 $2,339.28 $2,409.46 Annuity Investment 0.00 $0.00 $15,068.37 $15,068.37 $31,068.37 $15,068.37 $30,588.79 $15,068.37 $15,068.37 $15,068.37 $63,494.15 Investment ($73,500.00) $75,705.00 $74,976.15 $77,225.43 $79,542.19 $85,206.64 Annuity $1,000.00 $1,000.00 $1,000.00 $1,000.00 Investment $73,500.00 $75,705.00 $77,976.15 $80,315.43 $25,100.00 Investment $ $ $ $ $ 1,000.00 2,030.00 3,090.00 1,850.00