As a result of a court settlement, an accident victim is awarded $1.5 million. The attorney takes one-third of this amount, another third is used for immediate expenses, and the remaining third is used to set up an annuity. What amount will this annuity pay at the beginning of each quarter for the next 4 years if the annuity earns 7.9%, compounded quarterly?

Explanation:

going by the given question above,

a)As the annuity pay is beginning of each year, it is annuity due

b)Present value(P)=$ 1.5/3 million= $ 0.5 million= $ 5*105

Periodic Payment When PV is known

i=0.072/4=0.018

N=5*4=20

x=(1+i)N-1=(1+0.018)19=1.403

A=5*105 / [ ((1- (1/1.403))/0.018)+1]

A=$ 29,485

Annuity pay at the starting of each quarter is $ 29,485

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.