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Present Value of an Ordinary Annuity of 1

Accounting
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Andrew Bogut just received a signing bonus of $1,000,000. His plan is to invest this payment in a fund that will earn 8%, compounded annually.Instead of investing the entire $1,000,000, Bogut invests $300,000 today and plans to make 9 equal annual investments into the fund beginning one year from today. What amount should the payments be if Bogut plans to establish the $1,999,000 foundation at the end of 9 years?
Mar 8th, 2015

a) 11 years. See the table in your text or use the this online calculator: 
http://www.calculatorsoup.com/calculator...

b) $140,556.80. First computing the value of $300,000 at end of year 9 at 6% = $506,844 (using the above online calculator). The remainder of $1,391,156 to be made in 9 installments with deposits made at the end of each year (by trial & error using the above online calculator).

Mar 8th, 2015

Incorrect

Mar 8th, 2015

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