Ask Question
BusinessBusiness
29 August, 21:22

Nancy Billows promised to pay her son $600 quarterly for four years. If Nancy can invest her money at 6% in an ordinary annuity, she must invest how much today? Round to the nearest cent.

+5
Answers (1)
  1. 29 August, 23:39
    0
    8,478.76

    Explanation:

    This is a time value of money (TVM) question; an ordinary annuity.

    Using a financial calculator, input the following to calculate the PV of the annuity;

    Recurring quarterly payment = 600

    Quarterly interest rate; I = 6%/4 = 1.5%

    Duration of annuity = 4*4 = 16

    One time future cashflow; FV = 0

    then compute a PV = $8478.76

    Therefore, she must invest $8,478.76 today to meet the annuity payments
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Nancy Billows promised to pay her son $600 quarterly for four years. If Nancy can invest her money at 6% in an ordinary annuity, she must ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers
You Might be Interested in
A company has current assets of $90,000 (of which $40,000 is inventory and prepaid items) and current liabilities of $40,000.
Answers (1)
Smith Company exchanges assets to acquire a building. The market price of the Smith stock on the exchange date was $35 per share and the building's book value on the books of the seller was $250,000.
Answers (1)
The expected return on Simmons Co's common stock is 14.63 percent and the yield to maturity in the firm's bonds is 7.6 percent. The weight of debt and equity is 21 percent and 79 percent, respectively.
Answers (1)
You are planning to make monthly deposits of $400 into a retirement account that pays 10 percent interest compounded monthly. if your first deposit will be made one month from now, how large will your retirement account be in 30 years?
Answers (1)
A common feature of skiing is waiting in lift lines. Does the existence of lift lines mean the price is not working to allocate the scarce resource? If so, what should be done about it?
Answers (1)
New Questions in Business
It ONLY makes sense to implement an ABC system when: A. ABC provides information to make better decisions. B. Its benefits exceed implementation costs. C. ABC traces more costs as direct costs. D.
Answers (1)
In your own words, describe the 3 functions of money.
Answers (1)
Lionel is an unmarried law student at State University Law School, a qualified educational institution. This year Lionel borrowed $24,000 from County Bank and paid interest of $1,440. Lionel used the loan proceeds to pay his law school tuition.
Answers (1)
According to federal regulations, an IRB must have at least two community members to fulfill membership requirements; one member whose expertise is not in a scientific area and one member who is not affiliated with the institution.
Answers (1)
The least efficient of all the different types of secondary markets is the
Answers (1)
Home » Business » Nancy Billows promised to pay her son $600 quarterly for four years. If Nancy can invest her money at 6% in an ordinary annuity, she must invest how much today? Round to the nearest cent.
Sign Up Forgot Password?