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26 June, 08:21

Scott Rolen, major league third baseman, agrees to defer $5 million from his salary this year for 10 years at 7 percent compounded annually. Beginning exactly 10 years from today the team will pay the first payment of Mr. Rolen's deferred salary as a 10-year annuity at 7 percent compounded annually. What will be the amount of this annuity payment?

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  1. 26 June, 08:48
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    What will be the amount of this annuity payment?

    $711.888

    Explanation:

    N Monthly principal interest Net value

    5.000.000

    1 711.888 361.888 350.000 4.638.112

    2 711.888 387.220 324.668 4.250.893

    3 711.888 414.325 297.562 3.836.568

    4 711.888 443.328 268.560 3.393.240

    5 711.888 474.361 237.527 2.918.879

    6 711.888 507.566 204.322 2.411.313

    7 711.888 543.096 168.792 1.868.218

    8 711.888 581.112 130.775 1.287.106

    9 711.888 621.790 90.097 665.315

    10 711.888 665.315 46.572 (0)
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