Question
Review the following cases and apply what you have learned in this week's module. Present value and future value of an annuity Fran Abrams wants
Review the following cases and apply what you have learned in this week's module.
Present value and future value of an annuity
Fran Abrams wants to determine how much money she will have in 5 years if she chooses Annuity A, that is, the ordinary annuity. She will deposit $ 1,000 annually, at the end of each of the next 5 years, into a savings account that pays 7% annual interest.
Present value and future value of mixed income
Frey Company, a shoe factory, has the opportunity to receive the following mixed income of cash flows for the next 5 years:
End of Year Cash Flow 1 $ 400.00 2 $ 800.00 3 $ 500.00 4 $ 400.00 5 $ 300.00
If the company must earn at least 9% on its investments, how much is the most it should pay for that opportunity?
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