1. John Quincy wants to withdraw $30,700 each year for 12 years from a fund that earns 8% interest.
How much must he invest today if the first withdrawal is at year-end? How much must he invest today if the first withdrawal takes place immediately? (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 458,581.)
First withdrawal at year-end
$
First withdrawal immediately
$
2. Riverbed Inc. issues $2,100,000 of 7% bonds due in 14 years with interest payable at year-end. The current market rate of interest for bonds of similar risk is 9%.
What amount will Riverbed receive when it issues the bonds? (For calculation purposes, use 5 decimal places as displayed in the factor table provided and final answer to 0 decimal places, e.g. 458,581.)
Amount received by Riverbed when bonds were issued $