On January 1, Alex received an inheritance of a thirty-year annuity. Starting on the day of the inheritance, the annuity pays $1,000 each January 1, $2,000 each April 1, $1,500 each July 1, and $5000 each October 1. (a) Using i = 5%, calculate the value of this inheritance on the day Alex inherits it. (Round your answer to the nearest cent.) $ (b) If the value on the day she inherits it is $140,000, find the annual effective rate i used to calculate this value to the nearest hundredth of a percent. %
On January 1, Alex received an inheritance of a thirty-year annuity. Starting on the day of the inheritance, the annuity pays $1,000 each January 1, $2,000 each April 1, $1,500 each July 1, and $5000 each October 1. (a) Using i = 5%, calculate the value of this inheritance on the day Alex inherits it. (Round your answer to the nearest cent.) $ (b) If the value on the day she inherits it is $140,000, find the annual effective rate i used to calculate this value to the nearest hundredth of a percent. %
Chapter3: Income Sources
Section: Chapter Questions
Problem 39P
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Transcribed Image Text:On January 1, Alex received an inheritance of a thirty-year annuity. Starting on the day of the inheritance, the annuity pays
$1,000 each January 1, $2,000 each April 1, $1,500 each July 1, and $5000 each October 1.
(a) Using i = 5%, calculate the value of this inheritance on the day Alex inherits it. (Round your answer to the nearest
cent.)
$
(b) If the value on the day she inherits it is $140,000, find the annual effective rate i used to calculate this value to the
nearest hundredth of a percent.
%
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