a. What is the amount of the annuity purchase required if you wish to receive a fixed payment of $250,000 for 20 years? Assume that the annuity will earn 12 percent per year. b. Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 20-year annuity is $1.5 million and the annuity earns a guaranteed annual return of 12 percent. The payments are to begin at the end of the current year. c. Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 20-year annuity is $1.5 million and the annuity earns a guaranteed annual return of 12 percent. The payments are to begin at the end of five years. (For all requirements, do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16))
a. What is the amount of the annuity purchase required if you wish to receive a fixed payment of $250,000 for 20 years? Assume that the annuity will earn 12 percent per year. b. Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 20-year annuity is $1.5 million and the annuity earns a guaranteed annual return of 12 percent. The payments are to begin at the end of the current year. c. Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 20-year annuity is $1.5 million and the annuity earns a guaranteed annual return of 12 percent. The payments are to begin at the end of five years. (For all requirements, do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16))
Chapter19: Lease And Intermediate-term Financing
Section: Chapter Questions
Problem 15P
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Transcribed Image Text:a. What is the amount of the annuity purchase required if you wish to receive a fixed payment of $250,000 for 20 years?
Assume that the annuity will earn 12 percent per year.
b. Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 20-year
annuity is $1.5 million and the annuity earns a guaranteed annual return of 12 percent. The payments are to begin at the
end of the current year.
c. Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 20-year
annuity is $1.5 million and the annuity earns a guaranteed annual return of 12 percent. The payments are to begin at the
end of five years.
(For all requirements, do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16))
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