You have your choice of two investment accounts. Investment A is a 5-year annuity that features end-of-month $2,500 payments

You have your choice of two investment accounts. Investment A is a 5-year annuity that features end-of-month $2,500 payments and has an interest rate of 11.5 percent compounded monthly. Investment B is a 10.5 percent continuously compounded lump sum investment, also good for five years. How much would you need to invest in B today for it to be worth as much as investment A five years from now?    A.  $108,206.67 B.  $119,176.06 C.  $124,318.08 D.  $129,407.17 E.  $131,008.15 FVA = $2,500 × [{[1 + (0.115/12)]5 × 12 -1}/(0.115/12)] = $201,462.23 PV = $201,462.23 e-1 × 0.105 ×5 = $119,176.06

125.

Given an interest rate of 8 percent per year, what is the value at date t = 9 of a perpetual stream of $500 annual payments that begins at date t = 17?    A.  $3,376.68 B.  $4,109.19 C.  $4,307.78 D.  $6,250.00 E.  $6,487.17 PVt = 17 = $500/.08 = $6,250 PVt = 9 = $6,250/1.0817-9 = $3,376.68 NOTE: This is a correction to the original problem solution.

126.	You want to buy a new sports car for $55,000. The contract is in the form of a 60-month annuity due at a 6 percent APR, compounded monthly. What will your monthly payment be?    A.  $1,047.90 B.  $1,053.87 C.  $1,058.01 D.  $1,063.30 E.  $1,072.11