E-9

Mark Ventura has just purchased an annuity to begin payment two years from today. The annuity is for $32,000per year and is designed to last 10 years.

If the interest rate for this problem calculation is 11 percent, what is the most he should have paid for the annuity? UseAppendix BandAppendix Dfor an approximate answer, but calculate your final answer using the formulaandfinancial calculator methods.(Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Max Payment=

E-10

You are chairperson of the investment fund for the Continental Soccer League. You are asked to set up a fund of semiannual payments to be compounded semiannually to accumulate a sum of $290,000 after eight years at a 10 percent annual rate (16 payments). The first payment into the fund is to take place six months from today, and the last payment is to take place at the end of the eighth year.UseAppendix AandAppendix Cfor an approximate answer, but calculate your final answer using the formula andfinancial calculator methods.

a.Determine how much the semiannual payment should be.(Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Semi-Annual Payment=

On the day after thesixthpayment is made (the beginning of thefourthyear), the interest rate goes up to an annual rate of12percent. This new rate applies to the funds that have been accumulated as well as all future payments into the fund. Interest is to be compounded semiannually on all funds.

b.Determine how much the revised semiannual payments should be after this rate change (there are 10 payments and compounding dates). The next payment will be in the middle of the fourth year.(Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Revised Semi-annual Payment=