Question

2.You work for JB Enterprises as a financial analyst. He wants to borrow $100,000 for expansion at 8% to be repaid in equal amounts over 20 years. JB wants to know the difference in the annual payment amounts if he pays at the beginning of the year or the end of the year (that is, ordinary annuity or annuity due). What is the difference in the annual payment amounts? (Hint—find the payments for both methods—ordinary and annuity due—and compare.)

3.After graduation, you plan to work for Melba Corporation for 10 years and then start your own business. You expect to save $5,000 a year for the first 5 years and $10,000 annually for the following 5 years, with the first deposit being made a year from today. In addition, your grandfather just gave you a $20,000 graduation gift which you will deposit immediately. If the account earns 8% compounded annually, what how much will you have when you start your business 10 years from now?

Answer 1

2.You work for JB Enterprises as a financial analyst. He wants to borrow $100,000 for expansion at 8% to be repaid in equal amounts over 20 years. JB wants to know the difference in the annual payment amounts if he pays at the beginning of the year or the end of the year (that is, ordinary annuity or annuity due). What is the difference in the annual payment amounts? (Hint—find the payments for both methods—ordinary and annuity due—and compare.)

$754.46

3.After graduation, you plan to work for Melba Corporation for 10 years and then start your own business. You expect to save $5,000 a year for the first 5 years and $10,000 annually for the following 5 years, with the first deposit being made a year from today. In addition, your grandfather just gave you a $20,000 graduation gift which you will deposit immediately. If the account earns 8% compounded annually, what how much will you have when you start your business 10 years from now?

$144944.22