Snick’s Board Shop
Ch 07-10 Solution
Present Value Analysis
Annuity payment required: ($14,770.17) Year Interest Annuity Investment
0 $0.00
Future need: 80,000.00$ 1 $0.00 $14,770.17 $14,770.17
Investment value in future: $89,423.99 Year Interest Investment
0 $73,500.00
Current investment: ($73,500.00) 1 $2,940.00 $76,440.00
Interest rate: 4% 2 $3,057.60 $79,497.60
Term (in years): 5 3 $3,179.90 $82,677.50
4 $3,307.10 $85,984.60
5 $3,439.38 $89,423.99
Investment value in future: $10,020.20 Year Interest Annuity Investment
0 –$
Current annuity investment: ($1,850.00) 1 $0.00 $1,850.00 1,850.00$
Interest rate: 4% 2 $74.00 $1,850.00 3,774.00$
Term (in years): 5 3 $150.96 $1,850.00 5,774.96$
4 $231.00 $1,850.00 7,855.96$
5 $314.24 $1,850.00 10,020.20$
Invest now: ($20,630.37) Year Interest Investment
0 $20,630.37
Future need: 25,100.00$ 1 $825.21 $21,455.59
Interest rate: 4% 2 $858.22 $22,313.81
Term (in years): 5 3 $892.55 $23,206.36
Term (in years): 5 2 $590.81 $14,770.17 $30,131.14
Interest rate: 4% 3 $1,205.25 $14,770.17 $46,106.56