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Your parents are retiring and want to set aside a lump sum earning annual interest compounded quarterly to pay out quarterly for ten years. What lump sum should your parents set aside today?
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VerifiedAnswered 1 year ago
Answered 1 year ago
Step 1
1 of 4To find how much they should invest in a lump sum now to provide a stream of payments, we need to find the present value of a quarterly ordinary annuity of for ten years at annual interest compounded quarterly using given table. To do so, first we need to find the number of interests period and period interest rate as follows:
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