Asked Dec 17, 2019
At the beginning of each year, Jerome invests $1,400 semiannually at 8% for nine years. Using the tables found in the textbook, determine the cash value of the annuity due at the end of the ninth year.
A. $37,939.86
B. $37,339.68
C. $37,399.68
D. $38,739.68

Expert Answer

Step 1

Annuity due refers to repeating payments that are made at the beginning of each period. We can determine the cash value of the annuity due at the end of the ninth year using the steps below:

Step 2

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Given that; Investment (or annuity payments)=$1400 Interest rate =8% Semiannual interest rate (r)=8% -2=4% Time period=9 years Semiannual term (n)=9x 2=18

Step 3

Determination of cash value of annuity due us...

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