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Chapt 6 TVM Project
Chapt 6 TVM Project
Analysis:
1. A How was the amount of the lump-sum determined? Create a calculation that might help
Johns sister understand.
This lump sum was determined by using the present value of an ordinary annuity table to
make the calculations. This table was used because we know the amount that would have
most likely been paid throughout the year and not just in one payment at the beginning of
the year. The 7% discount rate and the 25 years until retirement to find the number
11.65358 on the PVA table. The 11.65358 was multiplied by $200,000 to give the
settlement price of $2,330,716.
3. Write a brief reflection on how this assignment fits into your program and prepares you
for your field of study.