Answered: Now let’s pretend that we buy an…

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter2: Using Financial Statements And Budgets

Section: Chapter Questions

Problem 6FPE

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Now let’s pretend that we buy an annuity at the age of 70 with how much money we have in total from our index fund investing. Use this number: $1,188,506.12 Let’s buy a twenty year annuity that pays us 5% APR compounded monthly. 4. How much money will we get paid each month? 5. How much money in total will we get paid back? 6. How much interest will we make from the annuity?

Annuity Investing
Now let's pretend that we buy an annuity at the age of 70 with
how much money we have in total from our index fund
investing. Use the number you got above in #2 (hint: it should
be somewhere between one and two million dollars btw).
Let's buy a twenty year annuity that pays us 5% APR
compounded monthly.
4. How much money will we get paid each month?
5. How much money in total will we get paid back?
6. How much interest will we make from the annuity?

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