Contemporary Mathematics for Business and Consumers 7th Edition by Robert Brechner ,George Bergeman

تمرين 77

Present value of an annuity due

Apollo Enterprises has been awarded an insurance settlement of $5,000 at the end of each 6-month period for the next 10 years.
a. As the accountant, calculate how much the insurance company must set aside now at 6% interest compounded semiannually to pay this obligation to Apollo.
b. How much would the insurance company have to invest now if the Apollo settlement was changed to $2,500 at the end of each 3-month period for 10 years and the insurance company earned 8% interest compounded quarterly?
c. How much would the insurance company have to invest now if the Apollo settlement was paid at the beginning of each 3-month period rather than at the end?