Christina will receive a 5-year annuity of $1,200 a year, with the first payment occurring at Date 4. What is the value of this annuity to her today at a discount rate of 7.25 percent? A. $4,111.08 B. $4,209.19 C. $4.774.04 D. $3,961.80 E. $4,887.48

Christina will receive a 5-year annuity of $1,200 a year, with the first payment occurring at Date 4. What is the value of this annuity to her today at a discount rate of 7.25 percent? A. $4,111.08 B. $4,209.19 C. $4.774.04 D. $3,961.80 E. $4,887.48

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications

Section: Chapter Questions

Problem 12E

See similar textbooks

Related questions

Q: Kaitlin wants to save money to purchase a car. She buys an annuity with yearly payments that earn…

A: FV of an annuity is that amount which is the value of total periodic amounts in the future. FV =…

Q: Mary is going to receive a 33-year annuity of $9,800. Nancy is going to receive a perpetuity of…

Q: Janice and Terry Van Dyke have decided to establish a quarterly ordinary annuity of $8,000 for the…

A: Ordinary annuity refers to the periodic series of payments that an investor makes into an investment…

Q: Question 4# Maryam will receive the following payments at the end of the next four years: AED…

A: Present Value is the current value of all the future sum of money. This amount is discounted using…

Q: Jane receives payments of X at the beginning of each year forever. The present value of her annuity…

A: In this question payment is received at the beginning of each year and present value of annuity is…

Q: Ethan deposits $750 at the end of every month for 3 years and 1 months in a retirement fund at 3.86%…

A: The series of cash flows that are equal in amount and complete series is either positive or negative…

Q: A rich relative has bequeathed you a growing perpetuity. The first payment will occur in a year and…

A: Perpetuity means a series of infinite numbers of payments forever. A person will receive periodical…

Q: Strahd bought a 20-year annuity-immediate with payment size 350 at an annual effective rate of 4%.…

A: Mathematical concept is:

Q: A retiree wants to purchase an annuity that will provide her with end-of-year payments for the next…

A: Number of year end payment = 30 Years Rate of return = 5.5% First annual payment = $ 15,000 Annual…

Q: James deposits a fixed quarterly amount into an annuity account for his child's college fund. He…

A: Given: Future value is $60,000 Years = 17 APR = 3.7%

Q: Bridget Jones has a contract in which she will receive the following payments for the next five…

A: Discount rate = 11%

Q: 7. Kate deposits $9,900 each yearinto her retirement account. If these funds have an average eaming…

A: Given, A=$9900 r=11% n=40 years

Q: Goran plans to set aside money for his young daughter’s college tuition. He will deposit money in an…

A: Given: Future value of annuity = $71,000 Interest = 2.4%

Q: Tina saved $679,000 for her retirement annuity. If she wants it to last her 30 years, earing 4.56%…

A: An annuity is a stream of equivalent periodic cash flows that occurs over a specific time duration.…

Q: Jean-Rene wants to make a lump-sum deposit today such that at the end of every three months for the…

A: Given Information: Interest rate = 8.75% compounded semi-annually Lump-sum payment = $10,000 Payment…

Q: Connie wants to have an annuity payment of $2000 at the end of every three months. How much should…

A: Present value of annuity formula will be used to calculated the amount required for periodic…

Q: To save money for his daughter's college tuition, Josh invests $279 every quarter in an annuity that…

A: Annuity means number of payments, which are equal in size and made at equal interval of time for a…

Q: Willie deposits a fixed monthly amount into an annuity account for his child's college fund. He…

A: Future value of annuity = P * [ (1+r)^n - 1 ] /r Where, Future value of annuity = $75000 P =…

Q: Joe plans to set aside money for his young daughter's college tuition. He will deposit money in an…

A: Future value of an annuity: Future value of the annuity is the annuity factor used to calculate the…

Q: Your uncle is about to retire, and he wants to buy an annuity that will provide him with $5,300 of…

A: Calculate the present value of annuity as follows: Present value = Payment *(1-(1+rate)^-years)/Rate…

Q: Karen deposits P100 at the beginning of each month into an annuity that pays a 6% annual interest at…

A: We need to use future value of annuity due formula to calculate amount in account at end of 5 years.…

Q: Your uncle is about to retire, and he wants to buy an annuity that will provide him with $6,000 of…

A: RATE 15.25% YEARS 24 PMT (MONTHLY PAYMENT) 6000 FUTURE VALUE $0 FIRST PAYMENT IMMEDIATE…

Q: Alejandra has an payout annuity that pays 66% annual interest compounded monthly. This is a 2020…

A: To solve this question, firstly have to take $10,000 as the present value and by using Annuity…

Q: Mary is going to recieve a 36-year annuity of $9,100. Nancy is going to recieve a prepetuity of…

A: Present value is the current value of the future payment at a given rate of return. Given: Years =…

Q: Frank plans to set aside money for his young daughter's college tuition. He will deposit money in an…

A: The Future Value of the Annuity refers to the sum value of all the payments which is occurred…

Q: Bill is the owner of an ordinary annuity that will pay him $12,000 at the end of each of the next…

A: solution Bill is the owner of an ordinary annuity that will pay him $12,000 at the end of each of…

Q: 4. Mr. Thomas will receive $8,500 a year for the next 15 years from her trust. If a 7 percent…

A: Introduction: The present value of annuity due refers to the current value of a series of future…

Q: I and Mrs. Dafoe are doing some estimates of the amount of funds they purchase an annuity paying…

A: Present value of monthly annuity would be the amount required to purchase the annuity considering…

Q: save for her newborn son S college education, the beginning of each year for the next 18 years. The…

A: Please refer to the image belowp

Q: 4. Mr. Thomas will receive $8,500 a year for the next 15 years from her trust. If a 7 percent…

A: Introduction: The present value of annuity due refers to the current value of a series of future…

Q: Amy purchases an annuity that will give her payments of R at the end of each quarter for seven…

A: An Annuity Due is a stream of regular periodic payments made at a beginning of period for a…

Q: Latanya Brown established an ordinary annuity of $1,000 annually at 9% annual interest. What is the…

A: The compounding method is used to determine the future value of cash that is deposited today.

Q: Your uncle is about to retire, and he wants to buy an annuity that will provide him with $7,100 of…

A: Immediate annuity payments are brought by investors by paying company in lump sum. Formula for…

Q: Your uncle is about to retire, and he wants to buy an annuity that will provide him with $5,300 of…

A: The today’s cost can be calculated using the PV function of excel. Inputs of the PV function will…

Q: Mary is going to receive a 33-year annuity of $8,800. Nancy is going to receive a perpetuity of…

A: Present value is computed as: Present value =Future value ×11+rnwhere, r= rate of interest n= no. of…

Q: Connie wants to have an annuity payment of $2,200 at the END of every three months. How much should…

A: Using the PV in excel

Q: c. Nancy wants to contribute $8,000 at the end of each year into a 5 401(k) plan for 20 years with…

A: Introduction: The term annuity refers to a series of payments that are made regularly. There are two…

Q: For her daughter's university education, Carla Hackl has invested an inheritance in fund paying 9.2%…

A: The present value is the present worth of the amount that will be paid or received in the future.

Q: Strahd bought a 20-year annuity-immediate with payment size 350 at an annual effective rate of 4%.…

Q: Which of the following choices is considered as an annuity? Explain. a. Niall gets $10 this year…

A: Annuity can be defined as an insurance product which provides a regular income to the annuity…

Q: Today is January 1 2021, Jackson will use a single premium to purchase an annuity today. This…

A: The annual payment is $10,000. The interest rate is 3.8% p.a.

Q: Suppose you wish to invest in an annuity so that you will have $120,000 at some future date for your…

A: We invest $350 monthly at a interest rate of 5.85% per month in order to give the child $120,000 at…

Q: John purchases an annuity due paying 6 % quarterly. If his payment is $ 250, the amount value will…

A: Annuity due is an annuity whose payment is due immediately at the beginning of each period.

Q: Marcie Mays plans to have $350,000 in retirement fund 30 years from now. What monthly ordinary…

A: Future value of ordinary annuity Annuity is a series of equal payments at equal interval for a…

Q: Bob purchases an annuity that will pay him $10,000 a year for the next 15 years starting a year from…

A: Present Value of Ordinary Annuity refers to the concept which gives out the discounted or today's…

Q: Arich relative has bequeathed you a growing perpetuity. The first payment will occur in a year and…

A: First payment (P1) = $4000 Growth rate (g) = 3% r = 15%

Q: Delia purchases an annuity that will pay her $10,000 per year for the next 10 years starting next…

A: Solution:- When an equal amount is paid each period at the end of period, it is called ordinary…

Question

100%

Christina will receive a 5-year annuity of $1,200 a year, with the first payment occurring at Date 4. What is the value of this annuity to her today at a discount rate of 7.25 percent?

A. $4,111.08

B. $4,209.19

C. $4.774.04

D. $3,961.80

E. $4,887.48

The answer given is E, however, mine is D. Could you help me to explain this question?

Video Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Your friend has a trust fund that will pay her the following amounts at the given interest rate for the given number of years. Calculate the current (present) value of your friends trust fund payments. For further instructions on future value in Excel, see Appendix C.
Delia purchases an annuity that will pay her $10,000 per year for the next 10 years starting next year. Assuming a rate of 6%, what is the value of the annuity. Choose the closest. a) $106,000 b) $131,808 c) $159,374 d) $171,569
Janet receives a $ 10,000 life insurance benefit. If she uses the proceeds to buy an n-year annuity immediate, the annual payout will be 1534.86. If a 2n-year annuity due is purchased, the annual payout will be 994.13. Both calculations are based on an effective annual interest rate of i. Calculate i.
Matt will receive an annuity of $11,850.75 a year for nine years. The first payment is to be received six years from today. At a 4.34% discount rate, this annuity’s worth today is closest to A. $86,007.68. B. $80,158.41. C. $73,204.97. D. $70,160.02.
Anna purchases a retirement annuity that will pay her $2,000 at the end of every six months for the first nine years and $200 at the end of every month for the next four years. The annuity earns interest at a rate of 3.6% compounded quarterly. a. What was the purchase price of the annuity? Round to the nearest cent b. How much interest did Anna receive from the annuity? Round to the nearest cent
The terms of a single parent's will indicate that a child will receive an ordinary annuity of $12,000 per year from age 18 to age 24 (so that the child can attend college) and that the balance of the estate goes to a niece. If the parent dies on the child's 12th birthday, how much money must be removed from the estate to purchase the annuity? (Assume an interest rate of 7%, compounded annually. Round your answer to the nearest cent.)
Amanda purchases a retirement annuity that will pay her $2,500 at the end of every six months for the first nine years and $700 at the end of every month for the next six years. The annuity earns interest at a rate of 4% compounded quarterly. a. What was the purchase price of the annuity? b. How much interest did Amanda receive from the annuity? Not use excel
Amy purchases an annuity that will give her payments of R at the end of each quarter for seven years. She will receive the first of these payments in 1.5 years. If Amy paid $50,000 for this annuity and will earn a nominal rate of interest of 6% compounded quarterly,(a) write the equation of value (using the appropriate actuarial notation) for this annuity at the time of purchase. Be sure to indicate the effective rate per payment period being used.(b) find the value of R.
Danielle receives $7,500 at the end of every quarter for 5 years for money that she loaned to a friend at 3.08% compounded quarterly. a. What type of annuity is this? a.Ordinary simple annuity b.Ordinary general annuity c.Simple annuity due d.General annuity due b. How many payments are there in this annuity? Round up to the next payment
Katie is planning to receive an annuity of $7,545 per year for the next 38 years as part of her retirement plan. The interest rate is 0.06 per annum compounded annually. Calculate the present value (PV) of this annuity $6,191.79 $1,484.60 $4,920.36 $5,190,960.00 $112,013.21
Mary is going to receive a 33-year annuity of $8,800. Nancy is going to receive a perpetuity of $8,800. If the appropriate interest rate is 11 percent, how much more is Nancy’s cash flow worth? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.))
Erica purchases a retirement annuity that will pay her $1,500 at the end of every six months for the first twelve years and $500 at the end of every month for the next six years. The annuity earns interest at a rate of 3.8% compounded quarterly. a. What was the purchase price of the annuity? Round to the nearest cent b. How much interest did Erica receive from the annuity? Round to the nearest cent