Mark Ventura has just purchased an annuity to begin payment two years from today. The annuity is for $17,000 per year and is designed to last 10 years. If the interest rate for this problem calculation is 12 percent, what is the most he should have paid for the annuity? Use Appendix B and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Maximum payment Appendix B Present value of $1, PVF 1 PV = FV [(1+1)" 9% 10% Period 1 2 1% 0.990 0.980 5% 0.952 0.917 2% 0.980 0.961 0.942 0.924 12% 0.893 0.797 0.907 3 11% 0.901 0.812 0.731 0.659 0.593 0.864 0.971 0.961 0.842 0.772 0.708 8% 0.926 0.857 0.794 0.735 0.681 0.630 0.583 0.712 0.636 4 5 0.906 0.951 0.942 3% 0.971 0.943 0.915 0.888 0.863 0.837 0.813 0.789 0.766 0.744 0.722 0.701 0.823 0.784 0.746 Percent 6% 7% 0.943 0.935 0.890 0.873 0.840 0.816 0.792 0.763 0.747 0.713 0.705 0.666 0.665 0.623 0.627 0.582 0.592 0.544 0.558 0.508 0.527 0.475 0.497 0.444 6. 0.535 0.482 0.567 0.507 0,452 7 0.933 8 0.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386 0.350 0.319 0.290 0.540 0.404 0.888 0.871 0.853 0.837 0.820 0.804 0.788 4% 0.962 0.925 0.889 0.855 0.822 0.790 0.760 0.731 0.703 0.676 0.650 0.625 0.601 0.577 0.555 0.534 0.513 0.494 0.923 0.914 0.905 9 0.650 0.596 0.547 0.502 0.460 0.422 0.388 0.356 10 0.711 0.677 0.645 0.614 0.585 0.557 0.530 0.505 0.481 0.500 0.463 0.429 0.434 0.391 0.352 0.317 0.286 0.361 0.322 0.287 11 0.896 0.887 12 0.397 0.257 13 0.879 0.773 0.681 0.469 0.368 0.326 0.258 0.229 0.415 0.388 14 0.442 0.263 15 0.870 0.861 0.853 0.758 0.743 0.728 0.714 0.700 0.661 0.642 0.623 0.605 0.417 0.394 0.340 0.315 0.292 0.299 0.275 0.252 16 0.458 0.362 0.339 0.317 0.296 0.205 0.183 0.163 0.146 0.130 17 0.844 0.270 0.231 0.436 0.416 0.371 0.350 18 0.836 0.587 0.250 0.212 19 0.828 0.686 0.570 0.475 0.396 0.331 0.232 0.277 0.258 0.239 0.218 0.198 0.180 0.164 0.149 0.092 0.057 0.022 0.009 0.232 0.209 0.188 0.170 0.153 0.138 0.124 0.074 0.044 0.015 0.005 0.116 0.104 20 0.820 0.554 0.456 0.312 0.215 0.194 0.178 0.116 0.075 0.377 0.295 0.673 0.610 0.552 25 0.780 0.184 0.146 0.059 0.233 0.174 30 0.742 0.478 0.412 0.307 0.228 0.375 0.308 0.208 0.141 40 0.099 0.046 0.672 0.231 0.142 0.087 0.453 0.131 0.067 0.034 0.097 0.054 0.032 0.013 0.033 0.011 0.003 50 0.608 0.372 0.021 Appendix B (concluded) Present value of $1 Percent Period 13% 14% 15% 16% 17% 18% 19% 20% 25% 30% 35% 40% 50% 1 0.885 0.877 0.862 0.855 0.840 0.833 0.769 0.714 0.870 0.756 0.847 0.718 0.783 0.667 0.444 0.769 0.743 0.731 0.694 0.800 0.640 0.512 0.592 2 3 0.741 0.549 0.406 0.706 0.593 0.510 0.693 0.675 0.658 0.641 0.624 0.609 0.579 0.455 0.364 0.296 4 0.613 0.592 0.572 0.552 0.534 0.499 0.410 5 0.543 0.480 0.425 0.519 0.456 0.400 0.497 0.432 0.376 0.476 0.410 0.354 0.482 0.402 0.335 6 0.456 0.390 0.333 0.285 0.515 0.437 0.370 0.314 0.266 0.225 0.419 0.352 0.296 0.350 0.269 0.207 0.159 0.328 0.262 0.210 0.168 0.301 0.223 0.165 0.122 0.260 0.186 0.133 0.095 0.198 0.132 0.088 0.059 7 0.279 0.233 0.376 0.305 0.123 0.068 0.327 0.284 0.351 0.308 0.270 0.091 0.067 0.039 0.026 9 0.263 0.243 0.134 0.094 0.333 0.295 0.261 10 0.227 0.191 0.247 0.215 0.208 0.178 0.017 0.194 0.162 0.135 0.107 0.086 0.048 0.035 0.025 0.073 0.056 0.249 0.209 0.176 0.148 0.124 0.104 0.088 11 0.237 0.162 0.012 12 0.231 0.187 0.195 0.168 0.145 0.137 0.112 0.043 0.018 0.208 0.182 0.008 0.152 0.130 0.069 0.055 13 0.204 0.163 0.116 0.093 0.033 0.013 0.005 14 0.181 0.141 0.125 0.111 0.078 0.044 0.025 0.009 0.050 0.037 0.027 0.020 0.015 0.011 0.008 0.006 0.005 0.160 0.140 0.003 0.099 0.084 15 0.123 0.108 0.095 0.074 0.065 0.035 0.020 0.006 0.160 0.141 16 0.123 0.107 0.093 0.071 0.054 0.028 0.005 0.081 0.069 0.062 0.052 0.015 0.012 0.002 0.002 0.001 0.001 17 0.108 0.093 0.080 0.060 0.023 0.003 0.125 0.111 18 0.095 0.081 0.044 0.045 0.038 0.031 0.009 0.002 19 0.098 0.083 0.069 0.060 0.051 0.070 0.007 0.003 0.002 0.059 0.051 0.043 0.020 0.051 0.043 0.037 0.016 0.037 0.031 0.018 0.014 0.012 0.004 20 0.001 0.087 0.047 0.073 0.038 0.026 0.010 0.005 0.001 0.002 0.001 25 0.024 0.013 0.061 0.030 0.015 0.004 30 0.026 0.020 0.009 0.005 0.004 0.001 0.012 0.003 0.007 0.001 40 0.008 0.005 0.002 0.001 0.001 50 0.002 0.001 0.001 0.001 Appendix D Present value of an annuity of $1, PVFA PVA=A 1 (1 + i)" Period 1% 2% 3% 4% 5% 8% 9% 10% 11% 12% 1 ........ 0.901 1.713 0.893 1.690 2 0.990 1.970 2.941 3.902 4.853 3 0.971 1.913 2.829 3.717 4.580 0.952 1.859 2.723 3.546 0.962 1.886 2.775 3.630 4.452 0.926 1.783 2.577 3.312 0.980 1.942 2.884 3.808 4.713 5.601 6.472 7.325 2.444 3.102 0.909 1.736 2.487 3.170 3.791 2.402 3.037 4 0.917 1.759 2.531 3.240 3.890 4.486 5.033 5.535 5 4.329 3.993 3.696 3.605 6 5.417 5.242 4.623 4.111 5.795 6.728 7.652 7 4.355 4.868 5.076 5.786 6.463 6.230 5.206 4.564 8 7.020 5.747 4.968 9 5.995 6.418 10 5.328 5.650 8.566 9.471 10.368 11.255 12.134 8.162 8.983 9.787 10.575 7.108 7.722 8.306 6.002 6.733 7.435 8.111 8.760 9.385 9.986 10.563 7.786 8.530 9.253 9.954 10.635 6.247 6.710 7.139 11 Percent 6% 7% 0.943 0.935 1.833 1.808 2.673 2.624 3.465 3.387 4.212 4.100 4.917 4.767 5.582 5.389 6.210 5.971 6.802 6.515 7.360 7.024 7.887 7.499 8.384 7.943 8.853 8.358 9.295 8.745 9.712 9.108 10.106 9.447 10.477 9.763 10.828 10.059 11.158 10.336 11.470 10.594 12.783 11.654 13.765 12.409 15.046 13.332 15.762 13.801 6.805 7.161 12 8.863 9.394 7.536 7.904 13 14 5.938 6.194 6.424 6.628 6.811 13.004 11.296 11.348 12.106 12.849 13.578 8.244 9.899 10.380 15 13.865 8.559 11.938 12.561 16 4.231 4.712 5.146 5.537 5.889 6.207 6.492 6.750 6.982 7.191 7.379 7.549 7.702 7.839 7.963 8.422 8.694 8.951 9.042 11.118 11.652 12.166 12.659 13.134 10.838 11.274 6.974 7.120 17 5.335 5.759 6.145 6.495 6.814 7.103 7.367 7.606 7.824 8.022 8.201 8.365 8.514 9.077 9.427 9.779 9.915 14.718 15.562 16.398 17.226 18.046 22.023 25.808 32.835 39.196 18 19 20 ........ 25 30 14.292 14.992 15.678 16.351 19.523 22.396 27.355 31.424 13.166 13.754 14.324 14.877 17.413 19.600 7.487 7.786 8.061 8.313 8.544 8.756 8.950 9.129 9.823 10.274 10.757 13.590 8.851 9.122 9.372 9.604 9.818 10.675 11.258 11.925 12.233 11.690 12.085 12.462 14.094 15.372 17.159 18.256 15.622 17.292 19.793 21.482 7.250 7.366 7.469 7.843 8.055 8.244 8.304 40 23.115 25.730 50 10.962 Appendix D (concluded) Present value of an annuity of $1 Percent Period 13% 14% 15% 16% 17% 18% 19% 20% 25% 30% 35% 40% 50% 1 0.885 0.877 0.870 0.862 0.855 0.840 0.800 0.769 0.741 0.847 1.566 0.833 1.528 0.714 1.224 0.667 1.111 2. 1.647 1.626 1.605 1.585 1.547 1.440 1.361 1.289 1.668 2.361 3 2.322 2.283 2.246 2.210 2.174 2.140 2.106 1.952 1.816 1.589 1.407 1.696 1.997 4 2.974 2.914 2.855 2.798 2.743 2.690 2.639 2.589 2.362 2.166 1.849 1.605 1.737 5 3.517 3.433 3.199 2.436 2.035 3.352 3.784 3.274 3.685 3.127 3.498 3.058 3.410 2.991 3.326 2.689 2.951 2.220 2.385 6 3.998 3.889 3.589 2.643 2.168 1.824 7 4.288 4.160 3.922 3.812 3.706 3.161 2.802 2.508 4.423 4.799 4.039 4.344 3.605 3.837 2.263 2.331 1.883 1.922 8 4.639 4.487 4.207 4.078 3.329 2.925 2.598 2.665 9 4.451 5.132 5.426 5.687 10 4.946 5.216 5.453 4.772 5.019 5.234 3.954 4.163 4.339 4.486 4.303 4.494 4.656 4.659 4.836 3.463 3.571 3.656 4.031 4.192 4.327 4.439 4.533 3.019 3.092 3.147 3.190 2.715 2.752 11 2.379 2.414 2.438 2.456 2.469 1.948 1.965 1.977 1.985 4.607 4.833 5.029 5.197 5.342 5.468 5.575 12 5.918 5.660 5.421 4.988 4.793 4.611 3.725 2.779 13 6.122 5.842 5.583 5.118 4.910 3.780 3.223 2.799 1.990 4.715 4.802 14 6.302 5.229 6.002 6.142 5.008 5.092 5.724 5.847 5.954 4.611 4.675 3.824 3.859 3.249 3.268 2.478 2.484 15 1.993 1.995 6.462 2.814 2.825 2.834 5.324 4.876 16 6.604 6.265 5.668 5.162 4.938 4.730 3.887 3.283 1.997 5.405 5.475 2.489 2.492 17 6.729 6.373 5.749 5.222 4.775 3.910 3.295 2.840 1.998 6.047 6.128 4.988 5.033 18 5.818 5.534 4.812 3.928 2.494 6.840 6.938 7.025 6.467 6.550 19 6.198 1.999 1.999 5.877 5.273 5.316 5.353 4.843 5.584 5.628 3.304 3.311 3.316 5.070 5.101 2.496 2.844 2.848 2.850 3.942 3.954 20 6.623 5.929 4.870 2.497 1.999 25 5.467 6.259 6.464 6.566 3.985 3.329 7.330 7.496 2.856 6.873 7.003 6.097 6.177 5.766 5.829 5.871 5.195 5.235 4.948 4.979 2.499 2.500 30 5.517 3.995 3.332 2.000 2.000 2.000 40 7.634 6.642 6.233 5.548 5.258 4.997 7.105 7.133 2.500 2.857 2.857 2.857 3.999 4.000 3.333 3.333 50 7.675 6.661 6.246 5.880 5.554 5.262 4.999 2.500 2.000