Explain how future value of an annuity interest factors can


1. Explain how future value of an annuity interest factors can be used to solve a sinking fund problem.

2. Describe how to set up a loan amortization schedule.

3. November 21, 1980, was the day of a tragic fire in the MGM Grand Hotel in Las Vegas. At the time of the fire, the hotel had only $30 million of liability insurance. One month after the fire, the hotel bought an extra $170 million of liability cover- age for a premium of $37.5 million, retroactive to November 1, 1980 (before the fire). Based on your knowledge of present value concepts, why would insurers be willing to issue insurance to MGM under these conditions?

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Financial Management: Explain how future value of an annuity interest factors can
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