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Find the present value of $1,000 to be received at the end of 4 years at a nominal annual interest rate of 12%, compounded semiannually. A. $627 b. $637 c. $675 d. $622 30. Given a 15% annual opportunity cost, $1. 0 three years from now is worth more than $2. 00 nine years from now. A. True 31 . Your great-uncle Claude is 82 years old. Over the years, he has accumulated savings of $80,000.
He estimates that he will live another 10 years at the most and wants to spend his savings by then. (If he lives longer than that, he figures you will be happy to take care of him. ) Uncle Claude places his $80,000 into an account earning 10 percent annually and sets it up in such a way that he will be making 10 equal annual withdrawals (the first one occurring 1 year from now) such that his account balance will be zero at the end of 10 years. How much will he be able to withdraw each year? A. $13,180. 71 c. $12,989. 22 d. $13,019. 63 32.
Your parents have discovered a $1,000 bond at the bottom of their safe deposit box. The bond was given to you by your late great-aunt Hilly on your second birthday. The bond pays an annual interest rate of 5 percent. Interest accumulates and is paid at the time the bond is redeemed. You are now 27 years old. What is the current worth of the bond (principal plus interest)? A. $3,500 b. $3,421 c. $3,327 d. $3386 33. Your mother is planning to retire this year. Her firm has offered her a lump sum detriment payment of $50,000 or a $6,000 lifetime ordinary annuity-whichever she chooses.
Your mother is in reasonably good health and expects to live for at least 15 more years. Which option should she choose, assuming that an 8 percent annual interest rate is appropriate to evaluate the annuity? A. $51 ,354 b. $52,535 c. $51,862 d. $52,328 34. A life insurance company has offered you a new