What SUP
Ch 07-01 Solution
Present Value Analysis
Year Interest Annuity Investment
Future need: 95,000.00$ 0 $0.00
Term (in years): 4 1 $0.00 $22,371.55 $22,371.55
Interest rate: 4% 2 $894.86 $22,371.55 $45,637.97
Annuity payment required: ($22,371.55) 3 $1,825.52 $22,371.55 $69,835.04
4 $2,793.40 $22,371.55 $95,000.00
Year Interest Annuity Investment
Current annuity investment: ($8,500.00) 0 –$
Interest rate: 3% 1 $0.00 $8,500.00 8,500.00$
Term (in years): 4 2 $255.00 $8,500.00 17,255.00$
Investment value in future: $35,560.83 3 $517.65 $8,500.00 26,272.65$
4 $788.18 $8,500.00 35,560.83$
Year Interest Investment
Future need: 10,500.00$ 0 $9,329.11
Interest rate: 3% 1 $279.87 $9,608.99
Term (in years): 4 2 $288.27 $9,897.26
Invest now: ($9,329.11) 3 $296.92 $10,194.17
Year Interest Investment
Current investment: ($20,000.00) 0 $20,000.00
Interest rate: 3% 1 $600.00 $20,600.00
Term (in years): 4 2 $618.00 $21,218.00
Investment value in future: $22,510.18 3 $636.54 $21,854.54