1) You buy an annuity that will pay you $20,000 a year for 25 years. The payments are paid on the first day of each year. What is the value of this annuity today if the discount rate is 8.5 percent?
a) $202,082
b) $204,683
c) $222,082
d) $500,000
e) None of the above.
2) Upon graduation one year from today you expect to be earning a salary of $50,000. What do you expect your annual salary to be in ten years if you earn annual raises of 3.8%?
a) $69,943
b) $72,601
c) $91,303
d) None of the above.