Asked by Meaghan Crowley on May 07, 2024
Verified
From one of her retirement annuities, Grace Yasui will receive $3,000 each quarter for 5 years. If Grace earns an interest rate of 8% compounded quarterly, compute the present value of these payments. Use Tables 23-2A and 23-2B or a calculator.
Compounded Quarterly
An interest calculation method where interest is added to the principal sum of a deposit or loan on a quarterly basis, leading to interest earning interest.
Present Value
The present worth of a future amount of money or series of cash inflows based on a certain return rate.
Retirement Annuities
Financial products that provide a stream of payments to individuals after retirement, typically funded through premiums paid over time.
- Differentiate between calculating future value and determining present value.
- Show how to compute the present value given a specific return rate and amount of withdrawal.
- Employ financial tables or calculators to ensure precise financial planning and calculations.
Verified Answer
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Learning Objectives
- Differentiate between calculating future value and determining present value.
- Show how to compute the present value given a specific return rate and amount of withdrawal.
- Employ financial tables or calculators to ensure precise financial planning and calculations.