Question

A large tire manufacturer has just lost a major lawsuit and now must make 6 payments of $583000 at the end of each year to the injured parties. The court demands that an account be set up immediately to fund the payments. Using a 8% interest rate, how much must be in the account?  (Round your answer to the nearest dollar)

2. Jesse is saving for her daughter's college education. She will deposit $2000 a year for the next 15 years in an educational IRA account with Fidelity. The account pays an interest rate of 6% a year. How much money will be in the IRA account at the end of the 15th year?  (Round your answer to the nearesr dollar.)

3. Krista Ciaglio made a deposit in her account on January 1, 2008. The bank pays interest at 6%. After 6 years, she had $24750 in the account. How much did she originally deposit on January 1, 2008?  (Round your answer to the nearest dollar)

Answer 1

1)	Fv=0
	PMT= $ 583000
	N=6
	I/Y=8%
	Present value Factor	4.6228797
	Required amount = $ 583000*4.62288	2695139
There should be $ 2,695,139 in Account
2)	PMT= 2000
	N= 15
	I/Y=6%
	Future Value fator	23.276
	Amount of money at the end of 15 years = 2000*23.276	46,552
3)	N=6
	FV=24750
	I/Y=6%
	Present Value	0.70496
	Amount originally deposited = 24750*70496	17448