Problem
Present and future values of $1 at 3% are presented below:
|
N
|
FV $1
|
PV $1
|
FVA $1
|
PVA $1
|
FVAD $1
|
PVAD $1
|
|
1
|
1.03000
|
0.97087
|
1.0000
|
0.97087
|
1.0300
|
1.00000
|
|
2
|
1.06090
|
0.94260
|
2.0300
|
1.91347
|
2.0909
|
1.97087
|
|
3
|
1.09273
|
0.91514
|
3.0909
|
2.82861
|
3.1836
|
2.91347
|
|
4
|
1.12551
|
0.88849
|
4.1836
|
3.71710
|
4.3091
|
3.82861
|
|
5
|
1.15927
|
0.86261
|
5.3091
|
4.57971
|
5.4684
|
4.71710
|
|
6
|
1.19405
|
0.83748
|
6.4684
|
5.41719
|
6.6625
|
5.57971
|
|
7
|
1.22987
|
0.81309
|
7.6625
|
6.23028
|
7.8923
|
6.41719
|
|
8
|
1.26677
|
0.78941
|
8.8923
|
7.01969
|
9.1591
|
7.23028
|
|
9
|
1.30477
|
0.76642
|
10.1591
|
7.78611
|
10.4639
|
8.01969
|
|
10
|
1.34392
|
0.74409
|
11.4639
|
8.53020
|
11.8078
|
8.78611
|
|
11
|
1.38423
|
0.72242
|
12.8078
|
9.25262
|
13.1920
|
9.53020
|
|
12
|
1.42576
|
0.70138
|
14.1920
|
9.95400
|
14.6178
|
10.25262
|
|
13
|
1.46853
|
0.68095
|
15.6178
|
10.63496
|
16.0863
|
10.95400
|
|
14
|
1.51259
|
0.66112
|
17.0863
|
11.29607
|
17.5989
|
11.63496
|
|
15
|
1.55797
|
0.64186
|
18.5989
|
11.93794
|
19.1569
|
12.29607
|
|
16
|
1.60471
|
0.62317
|
20.1569
|
12.56110
|
20.7616
|
12.93794
|
Jose wants to cash in his winning lottery ticket. He can either receive seven, $8,000 annual payments starting today, or he can receive one lump-sum payment today based on a 3% annual interest rate. What would be the lump-sum payment?