Mr. Fish wants to build a house in 8 years. He estimates that the total cost will be $150,000

Mr. Fish wants to build a house in 8 years. He estimates that the total cost will be $150,000. If he can put aside $10,000 at the end of each year, what rate of return must he earn in order to have the amount needed?

A. Between 17% and 18%
B. Between 15% and 16%
C. 12%
D. None of these

FVIFA = FVA (App. C: 8 periods)
A
FVIFA = $150,000 = 15.0 Rate of return = approx. 17.5%
$10,000

Babe Ruth Jr. has agreed to play for the Cleveland Indians for $3 million per year for the next 10 years. What table would you use to calculate the value of this contract in today's dollars?

A. Present value of an annuity
B. Present value of a single amount
C. Future value of an annuity
D. None of these

Football player Walter Johnson signs a contract calling for payments of $250,000 per year, to begin 10 years from now. To find the present value of this contract, which table or tables should you use?

A. The future value of $1
B. The future value of an annuity of $1 and the future value of $1
C. The present value of an annuity of $1 and the present value of $1
D. None of these