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What interest rate used to determine amount of the payment

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Question 1: John won a lottery that will pay him $450000 at the end of each of the next twenty years. Zebra Finance has offered to purchase the payment stream for $7357500. What interest rate (to the nearest percent) was used to determine the amount of the payment?

Question 2: Use the following 9% interest factors.

Sheridan Company will receive $34000 today (January 1, 2017), and also on each January 1st for the next five years (2018 - 2022). What is the present value of the six $34000 receipts, assuming a 12% interest rate?

                                      Present Value of Ordinary Annuity                        Future Value of Ordinary Annuity

7 periods                                      5.0330                                              9.20043

8 periods                                          5.5348                                       11.02847

9 periods                                           5.9952                                           13.02104

Vaughn Manufacturing wishes to accumulate $2150000 by May 1, 2025 by making 8 equal annual deposits beginning May 1, 2017 to a fund paying 9% interest compounded annually. What is the required amount of each deposit?

Question 3: Sheridan Company will receive $34000 today (January 1, 2017), and also on each January 1st for the next five years (2018 - 2022). What is the present value of the six $34000 receipts, assuming a 12% interest rate?

Reference no: EM132538142

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