Question 1: 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 If Ali wishes to determine the amount of the annuity to be withdrawn each year, he should use following two tables in this order: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
Question 2: 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.