Question

1. A retiree is paid $1200 per month by an annuity. If the income is invested in an account that earns 9% interest compounded continuously, what is the future value of the income after ten years? (Round your answer to two decimal places.)

$ 233536.47 < --- wrong answer

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2. The winner of a lottery is awarded $7,000,000 to be paid in annual installments of $350,000 for 20 years. Alternatively, the winner can accept a "cash value" a one-time payment of $3,150,000. The winner estimates he can earn 8% annually on the winnings. What is the present value of the installment plan? (Round your answer to two decimal places.)

$ 340613.52 < --- Wrong answer

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3. An heiress receives an income stream from a will at a rate of

f(t) = 30,000e^0.023t  dollars per year.

She invests this income and earns 4.9% interest (compounded continuously). (Round your answers to two decimal places.)

(a) What is the future value of the income after ten years?

$ 435387.64 < ------ wrong answer

(b) Compute the present value of the income over a ten year period.

$ 266715.18 < ------ wrong answer

Answer 1