Wine Depot
Ch 07-07 Solution
Present Value Analysis
Annuity payment required: ($11,093.04) Year Interest Annuity Investment
0 $0.00
Term (in years): 7 1 $0.00 $11,093.04 $11,093.04
Interest rate: 3% 2 $332.79 $11,093.04 $22,518.87
Investment value in future: $9,838.99 Year Interest Investment
0 $8,000.00
Term (in years): 7 1 $240.00 $8,240.00
Current investment: ($8,000.00) 2 $247.20 $8,487.20
Interest rate: 3% 3 $254.62 $8,741.82
4 $262.25 $9,004.07
5 $270.12 $9,274.19
6 $278.23 $9,552.42
7 $286.57 $9,838.99
Investment value in future: $4,214.35 Year Interest Annuity Investment
0 –$
Term (in years): 7 1 $0.00 $550.00 550.00$
Current annuity investment: ($550.00) 2 $16.50 $550.00 1,116.50$
Interest rate: 3% 3 $33.50 $550.00 1,700.00$
4 $51.00 $550.00 2,300.99$
5 $69.03 $550.00 2,920.02$
6 $87.60 $550.00 3,557.63$
7 $106.73 $550.00 4,214.35$
Invest now: ($10,163.64) Year Interest Investment
0 $10,163.64
Term (in years): 7 1 $304.91 $10,468.55
Future need: 12,500.00$ 2 $314.06 $10,782.61
Interest rate: 3% 3 $323.48 $11,106.09
Future need: 85,000.00$ 3 $675.57 $11,093.04 $34,287.48