Answer:
Instructions are listed below.
Explanation:
Giving the following information:
An investment offers $7,100 per year for 20 years, with the first payment occurring one year from now.
A) i= 0.07
First, we need to calculate the final value:
FV= {A*[(1+i)^n-1]}/i
A= annual deposit
FV= {7,100*[(1.07^20)-1]}/0.07= 291,068
PV= FV/(1+i)^n
PV= 291,068/1.07^20= 75,217.50
B)n=45
FV= {7,100*[(1.07^45)-1]}/0.07= 2,028,820.11
PV= 2,028,820.11/1.07^45= $96,599.20
C) n=70
FV= {7,100*[(1.07^70)-1]}/0.07= 11,460,352.64
PV= 11,460,352.64/1.07^70= 100,538.76