34.

You are comparing two annuities with equal present values. The applicable discount rate is 7.25 percent. One annuity pays $2,500 on the first day of each year for 15 years. How much does the second annuity pay each year for 15 years if it pays at the end of each year?

A.	$2,331.00
B.	$2,266.67
C.	$2,500.00
D.	$2,390.50
E.	$2,681.25

AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Analyze Difficulty: Intermediate Learning Objective: 06-02 How loan payments are calculated and how to find the interest rate on a loan. Section: 6.2 Valuing Level Cash Flows: Annuities and Perpetuities Topic: Annuities

35.

Trish receives $450 on the first of each month. Josh receives $450 on the last day of each month. Both Trish and Josh will receive payments for next four years. At a discount rate of 9.5 percent, what is the difference in the present value of these two sets of payments?

A.	$141.80
B.	$151.06
C.	$154.30
D.	$159.08
E.	$162.50

Travis International has a one-time expense of $2.86 million that must be paid three years from now. Since the firm cannot raise that amount in one day, it wants to save an equal amount each month over the next three years to fund this expense. If the firm can earn 2.1 percent on its savings, how much must it save each month?

A.

$78,416.20

B.

$77,037.69

C.

$91,300.05

D.

$87,411.08

E.

$73,901.15

Your car dealer is willing to lease you a new car for $190 a month for 36 months. Payments are due on the first day of each month starting with the day you sign the lease contract. If your cost of money is 6.5 percent, what is the current value of the lease?

A.	$10,331.03
B.	$6,232.80
C.	$9,197.74
D.	$7,203.14
E.	$11,008.31 Please show explanation for all solutions