Example 2: Acnuity Present Value Suppose you need $20,000 each year for the next three years to make your tution paryments. Assume you need tha frst S 20,000 n esactly one yes, and that you can place yur money in a, savings neeount yieling 8% compounded annually. How much do you need to have n the acount toan INotec Ignore taves, and keep in mind that you don't want any funds to be loft in the account after the third withdrawat nor do you want to run short of money.) Example 3: Annulty Future value Supcose BIR just tumed 40 and hss decided it's time to get serious about saving Assuming that he making equsl annual deposhs in one year, how mach must each depost be? to o ur tine si milion by ago 65, he can earn 10%compounded annualy and wil begin Examole 4: Perpetulty Calculations Suppose you sre corsidering the purchase of a perpetual bond. The Issuer of the bond promises to pay the hoider $100 per year forever. f your opportunity rabe la 10% what is the most you would pay for the bond today? you are offered a bond that promises to pay the holder $100 per year. The opportunity rate is 10%. The bend wE mature in b0 years. what is the difference in value between the sorer bond and the pirpetual bond