An award is being established, and it will pay $11,000 every four years, with the first installment being paid in four years. The award will be given for an indefinitely long period of time. If the interest rate is 2% per annum, what lump-sum amount of money (invested now) will be required to endow this award forever?
An award is being established, and it will pay $11,000 every four years, with the first installment being paid in four years. The award will be given for an indefinitely long period of time. If the interest rate is 2% per annum, what lump-sum amount of money (invested now) will be required to endow this award forever?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
An award is being established, and it will pay $11,000 every four years, with the first installment being paid in four
years. The award will be given for an indefinitely long period of time. If the interest rate is 2%
per annum, what lump-sum amount of money (invested now) will be required to endow this award forever?
Transcribed Image Text:Present
Worth Factor
Discrete Compounding;/=2%
Single Payment
Compound
Amount
Factor
Compound
Amount
Uniform Series
Sinking
Capital
Factor
Present
Worth Factor
Fund
Factor
To Find F
To Find P
To Find F
To Find P
Given P
Given F
Given A
Given A
Given F
To Find A
Recovery
Factor
To Find A
Given P
N
FIP
PIF
FIA
PIA
AIF
AIP
1
1.0200
0.9804
1.0000
0.9804
1.0000
1.0200
2
1.0404
0.9612
2.0200
1.9416
0.4950
0.5150
3
1.0612
0.9423
3.0604
2.8839
0.3268
0.3468
4
1.0824
0.9238
4.1216
3.8077
0.2426
0.2626
5
1.1041
0.9057
5.2040
4.7135
0.1922
0.2122
6
1.1262
0.8880
6.3081
5.6014
0.1585
0.1785
7
1.1487
0.8706
7.4343
6.4720
0.1345
0.1545
8
1.1717
0.8535
8.5830
7.3255
0.1165
0.1365
9
1.1951
0.8368
9.7546
8.1622
0.1025
0.1225
10
1.2190
0.8203
10.9497
8.9826
0.0913
0.1113
11
1.2434
0.8043
12.1687
9.7868
0.0822
0.1022
12
1.2682
0.7885
13.4121
10.5753
0.0746
0.0946
13
1.2936
0.7730
14.6803
11.3484
0.0681
0.0881
14
1.3195
0.7579
15.9739
12.1062
0.0626
0.0826
15
1.3459
0.7430
17.2934
12.8493
0.0578
0.0778
16
1.3728
0.7284
18.6393
13.5777
0.0537
0.0737
17
1.4002
0.7142
20.0121
14.2919
0.0500
0.0700
18
1.4282
0.7002
21.4123
14.9920
0.0467
0.0667
19
1.4568
0.6864
22.8406
15.6785
0.0438
0.0638
20
1.4859
0.6730
24.2974
16.3514
0.0412
0.0612
21
1.5157
0.6598
25.7833
17.0112
0.0388
0.0588
2222229
1.5460
0.6468
27.2990
17.6580
0.0366
0.0566
23
1.5769
0.6342
28.8450
18.2922
0.0347
0.0547
24
1.6084
0.6217
30.4219
18.9139
0.0329
0.0529
25
1.6406
0.6095
32.0303
19.5235
0.0312
0.0512
30
1.8114
0.5521
40.5681
22.3965
0.0246
0.0446
35
1.9999
0.5000
49.9945
24.9986
0.0200
0.0400
40
2.2080
0.4529
60.4020
27.3555
0.0166
0.0366
45
2.4379
0.4102
71.8927
29.4902
0.0139
0.0339
50
2.6916
0.3715
84.5794
31.4236
0.0118
0.0318
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