Wine Depot
Ch 07-07
Present Value Analysis
a. How much they would have to pay at the end of each year, assuminga 3 percent rate of return, to yield $85,000 at the end of 7 years.
Annuity payment required:			Year	Interest	Annuity	Investment
			0
Term (in years):	7		1
Interest rate:	3%		2
Future need:	$ 85,000.00		3
			4
			5
			6
			7
b. How much they would have to pay at the end of each year, assuminga 3 percent rate of return, to yield $85,000 at the end of 7 years.
Investment value in future:			Year	Interest	Investment
			0
Term (in years):	7		1
Current investment:	($8,000.00)		2
Interest rate:	3%		3
			4
			5
			6
			7
c. How much they would have at the end of 7 years if they invested$550 at the end of each year earning 3 percent per year.
Investment value in future:			Year	Interest	Annuity	Investment
			0
Term (in years):	7		1
Current annuity investment:	($550.00)		2
Interest rate:	3%		3
			4
			5
			6
			7
d. How much they would have to invest today to have $12,500 in 7 years,earning 3 percent per year.
Invest now:			Year	Interest	Investment
			0
Term (in years):	7		1
Future need:	$ 12,500.00		2
Interest rate:	3%		3
			4
			5
			6
			7