Put It into Practice -- Compute Future Value of Ordinary Annuity and Annuity Due FACTS Consider the following independent situations involving annuities. a. What is the future value of 20 periodic payments of $5,000, each made at the end of each period and compounded at 8% ? b. What is the future value of 15 deposits of $2,000, each made at the beginning of each period and compounded at 10% ? (Future value as of the end of the fifteenth period.) c. Steve Malpezzi needs $250,000 in 10 years. How much must he invest at the end of each year, at 5% interest, to meet his needs? d. Joe Morgan is investing $9,069 at the end of each year in a fund that earns 5% interest. In how many years will the fund be at $100,000 ? INSTRUCTIONS Using the appropriate interest table, answer the questions for each situation. Put It into Practice -- Compute the Present Value of an Ordinary Annuity and Annuity Due FACTS The Healthy Hearth Co., a maker of gluten-free breads and bagels, hopes to increase its market share in the upper Midwest. To do so, Healthy Hearth has decided to locate a new factory in Fargo, North Dakota. The company will either buy or lease a site depending upon which is more advantageous. The site location committee has narrowed down the available sites to the following three very similar alternatives that will meet their needs. Building A: Purchase for $1,300,000 cash. This building is larger than needed; however, the excess space can be sublet for 25 years at a net annual rental of $14,000. Rental payments will be received at the end of each year. Healthy Hearth is happy to be a landlord. Building B: Lease for 25 years with annual lease payments of $140,000 being made at the beginning of the year. Building C: Purchase for a cash price of $1,200,000, useful life 25 years. INSTRUCTIONS Explain which alternative would you recommend for Healthy Hearth, assuming a 12% cost of funds