Consider the case of the following annuities, and the need to compute either their expected rate of return or duration. Ryan inherited an annuity worth $3,280.16 from his uncle. The annuity will pay him five equal payments of $800 at the end of each year. The annuity fund is offering a return of

7%

Explanation:

present value of an annuity = annual payment x PV annuity factor

PV annuity factor = $3,280.16 / $800 = 4.1002

using an annuity table, given 5 periods and the factor value, the i = 7%

you could also calculate it by solving:

4.1002 = [1 - 1/(1 + i)ⁿ ] / i

but it is much longer and difficult than just looking at a table

answer; blank (1) hrm specialists,blank(2); line managers;

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.