Question 901402
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If you take the lump sum of $7700, then you need to calculate the future value of a single investment at 7% for 5 years:



*[tex \LARGE \ \ \ \ \ \ \ \ \ \ FV\ =\ PV(1\ +\ i)^n]



*[tex \LARGE \ \ \ \ \ \ \ \ \ \ FV_{lump}\ =\ 7700\left(1.07\right)^5]


If you take the periodic payments, each made at the beginning of the year, then you need to calculate the future value of an annuity due on 5 annual payments of $1900 at 7% per annum.


*[tex \LARGE \ \ \ \ \ \ \ \ \ \ FV\ =\ C\left[\frac{(1\ +\ i)^n\ -\ 1}{i}\right](1\ +\ i)]


*[tex \LARGE \ \ \ \ \ \ \ \ \ \ FV\ =\ 1900\left[\frac{(1.07)^5\ -\ 1}{0.07}\right](1.07)]


Do the arithmetic and compare the results.


John
*[tex \LARGE e^{i\pi}\ +\ 1\ =\ 0]
My calculator said it, I believe it, that settles it
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