PA3. LO 11.3 Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $2,500 over the next 4 years when the interest rate is 15%, how much do you need to deposit in the account? B. If you place $6,200 in a savings account, how much will you have at the end of 7 years with a 12% interest rate? C. You invest $8,000 per year for 10 years at 12% interest, how much will you have at the end of 10 years? D. You win the lottery and can either receive $750,000 as a lump sum or $50,000 per year for 20 years. Assuming you can earn 8% interest, which do you recommend and why? Present Value of $1 Table Factor = (1 + i)" Rate (0) 1 2 3 4 5 6 8 Period (n) 9 10 11 12 13 14 15 16 17 18 19 20 1% 0.990 0.980 0.971 0.961 0.952 0.942 0.933 0.924 0.914 0.905 0.896 0.888 0.879 0.861 0.861 0.853 0.844 0.836 0.828 0.820 2% 0.980 0.961 0.942 0.924 0.906 0.888 0.871 0.853 0.837 0.820 0.804 0.788 0.773 0.758 0.743 0.728 0.714 0.700 0.686 0.673 3% 0.971 0.943 0.915 0.888 0.863 0.837 0.813 0.789 0.766 0.744 0.722 0.701 0.681 0.661 0.642 0.623 0.605 0.587 0.570 0.554 5% 0.952 0.907 0.864 0.823 0.784 0.746 0.711 0.677 0.645 0.614 0.585 0.557 0.530 0.505 0.481 0.458 0.436 0.416 0.396 0.377 8% 0.926 0.857 0.794 0.735 0.681 0.630 0.583 0.540 0.500 0.463 0.429 0.397 0.368 0.340 0.315 0.292 0.270 0.250 0.232 0.215 10% 0.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386 0.350 0.319 0.290 0.263 0.239 0.218 0.198 0.180 0.164 0.149 12% 0.893 0.797 0.712 0.636 0.567 0.507 0.452 0.404 0.361 0.322 0.287 0.257 0.229 0.205 0.183 0.163 0.146 0.130 0.116 0.104 15% 0.870 0.756 0.658 0.572 0.497 0.432 0.376 0.327 0.284 0.247 0.215 0.187 0.163 0.141 0.123 0.107 0.093 0.081 0.070 0.061 20% 0.833 0.694 0.579 0.482 0.402 0.335 0.279 0.233 0.194 0.162 0.135 0.112 0.093 0.078 0.065 0.054 0.045 0.038 0.031 0.026 1 2 3 4 5 6 7 8 Period (n) 1% 0.990 1.970 2.941 3.902 4.853 5.795 6.728 7.652 8.566 9.471 10.368 11.255 12.134 13.004 13.865 14.718 15.562 16.398 17.226 18.046 Future Value of an Ordinary Annuity Table [1 - 1/(1 + i)"] Factor = Rate (i) 2% 3% 5% 8% 10% 12% 0.980 0.971 0.952 0.926 0.909 0.893 1.942 1.913 1.859 1.783 1.736 1.690 2.884 2.829 2.723 2.577 2.487 2.402 3.808 3.717 3.546 3.312 3.170 3.037 4.713 4.580 4.329 3.993 3.791 3.605 5.601 5.417 5.076 4.623 4.355 4.111 6.472 6.230 5.786 5.206 4.868 4.564 7.325 7.020 6.463 5.747 5.335 4.968 8.162 7.786 7.108 6.247 5.759 5.328 8.983 8.530 7.722 6.710 6.145 5.650 9.787 9.253 8.306 7.139 6.495 5.938 10.575 9.954 8.863 7.536 6.814 6.194 11.348 10.635 9.394 7.904 7.103 6.424 12.106 11.296 9.899 8.244 7.367 6.628 12.849 11.938 10.380 8.559 7.606 6.811 13.578 12.561 10.838 8.851 7.824 6.974 14.292 13.166 11.274 9.122 8.022 7.120 14.992 13.754 11.690 9.372 8.201 7.250 15.678 14.324 12.085 9.604 8.365 7.366 16.351 14.877 12.462 9.818 8.514 7.469 9 10 11 12 13 14 15 16 17 18 19 20 15% 0.870 1.626 2.283 2.855 3.352 3.785 4.160 4.487 4.772 5.019 5.234 5.421 5.583 5.725 5.847 5.954 6.047 6.128 6.198 6.259 20% 0.833 1.528 2.106 2.589 2.991 3.326 3.605 3.837 4.031 4.192 4.327 4.439 4.533 4.611 4.675 4.730 4.775 4.812 4.844 4.870 1 2 3 4 5 6 8 Period (n) 1% 1.010 1.020 1.030 1.041 1.051 1.062 1.072 1.083 1.094 1.105 1.116 1.127 1.138 1.149 1.161 1.173 1.184 1.196 1.208 1.220 9 10 11 12 13 14 15 16 17 18 19 20 Future Value of $1 Table Factor = (1 + i)" Rate (i) 3% 5% 8% 10% 1.030 1.050 1.080 1.100 1.061 1.103 1.166 1.210 1.093 1.158 1.260 1.331 1.126 1.216 1.360 1.464 1.159 1.276 1.469 1.611 1.194 1.340 1.587 1.772 1.230 1.407 1.714 1.949 1.267 1.477 1.851 2.144 1.305 1.551 1.999 2.358 1.344 1.629 2.159 2.594 1.384 1.710 2.332 2.853 1.426 1.796 2.518 3.138 1.469 1.886 2.720 3.452 1.513 1.980 2.937 3.797 1.558 2.079 3.172 4.177 1.605 2.183 3.426 4.595 1.653 2.292 3.700 5.054 1.702 2.407 3.996 5.560 1.754 2.527 4.316 6.116 1.806 2.653 4.661 6.727 2% 1.020 1.040 1.061 1.082 1.104 1.126 1.149 1.172 1.195 1.219 1.243 1.268 1.294 1.319 1.346 1.373 1.400 1.428 1.457 1.486 12% 1.120 1.254 1.405 1.574 1.762 1.974 2.211 2.476 2.773 3.106 3.479 3.896 4.363 4.887 5.474 6.130 6.866 7.690 8.613 9.646 15% 1.150 1.323 1.521 1.749 2.011 2.313 2.660 3.059 3.518 4.046 4.652 5.350 6.153 7.076 8.137 9.358 10.761 12.375 14.232 16.367 20% 1.200 1.440 1.728 2.074 2.488 2.986 3.583 4.300 5.160 6.192 7.430 8.916 10.699 12.839 15.407 18.488 22.186 26.623 31.948 38.338 Future Value of an Ordinary Annuity Table Factor = [(1 + i)"1] i 1 2 3 4 5 6 7 8 Period (n) 9 10 11 12 13 14 15 16 17 18 19 20 1% 1.000 2.010 3.030 4.060 5.101 6.152 7.214 8.286 9.369 10.462 11.567 12.683 13.809 14.947 16.097 17.258 18.430 19.615 20.811 22.019 2% 1.000 2.020 3.060 4.122 5.204 6.308 7.434 8.583 9.755 10.950 12.169 13.412 14.680 15.974 17.293 18.639 20.012 21.412 22.841 24.297 3% 1.000 2.030 3.091 4.184 5.309 6.468 7.662 8.892 10.159 11.464 12.808 14.192 15.618 17.086 18.599 20.157 21.762 23.414 25.117 26.870 Rate (i) 5% 8% 1.000 1.000 2.050 2.080 3.153 3.246 4.310 4.506 5.526 5.867 6.802 7.336 8.142 8.923 9.549 10.637 11.027 12.488 12.578 14.487 14.207 16.645 15.917 18.977 17.713 21.495 19.599 24.215 21.579 27.152 23.657 30.324 25.840 33.750 28.132 37.450 30.539 41.446 33.066 45.762 10% 1.000 2.100 3.310 4.641 6.105 7.716 9.487 11.436 13.579 15.937 18.531 21.384 24.523 27.975 31.772 35.950 40.545 45.599 51.159 57.275 12% 1.000 2.120 3.374 4.779 6.353 8.115 10.089 12.300 14.776 17.549 20.655 24.133 28.029 32.393 37.280 42.753 48.884 55.750 63.440 72.052 15% 20% 1.000 1.000 2.150 2.200 3.473 3.640 4.993 5.368 6.742 7.442 8.754 9.930 11.067 12.916 13.727 16.499 16.786 20.799 20.304 25.959 24.349 32.150 29.002 39.581 34.352 48.497 40.505 59.196 47.580 72.035 55.717 87.442 65.075 105.930 75.836 128.120 88.212 154.740 102.440 186.690