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Ali Shah sets aside 2,000 each year for 5 years.

Ali Shah sets aside 2,000 each year for 5 years. He then withdraws the funds on an equal annual basis for the next 4 years. If Ali wishes to determine the amount of the annuity to be withdrawn each year, he should use following two tables in this order:

a) present value of an annuity of $1; future value of an annuity of $1

b) future value of an annuity of $1; present value of an annuity of $1

c) future value of an annuity of $1; present value of a $1

d) future value of an annuity of $1; future value of a $1

Sharon Smith will receive $1 million in 50 years. The discount rate is 14. As an alternative, she can receive $2,000 today. Which should she choose?

a) the $1 million dollars in 50 years.

b) $2,000 today.

c) she should be indifferent.

d) need more information.

Solution Preview

Ali Shah sets aside 2,000 each year for 5 years. He then withdraws the funds on an equal annual basis for the next 4 years. If Ali wishes to determine the amount of the annuity to be withdrawn each year, he should use ...

Solution Summary

This solution is comprised of a detailed explanation to answer if Ali wishes to determine the amount of the annuity to be withdrawn each year, he should use following two tables in the following order.

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