per year and the cash value is expected to be $1.5 million at retirement. Approximately how many payments can she expect to receive if annuity interest rates are 5.739 percent? (Do not round intermediate calculations. Round your answer to a whole number.)

per year and the cash value is expected to be $1.5 million at retirement. Approximately how many payments can she expect to receive if annuity interest rates are 5.739 percent? (Do not round intermediate calculations. Round your answer to a whole number.)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 4P

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: Calculate the return that Lin Shan is earning on her annuity.

A: Given, Investment - PV = 1000000 Payment - PMT = 60000/2 = 30000 years - N = 15 Period - m = 15*12 =…

Q: An engineer will deposit 10% of her salary each year into a retirement fund. If her current annual…

A: An Annuity is a series of payments of fixed amounts and at fixed intervals. These can be of two…

Q: If the Alfa Life Insurance Co. will pay you and your heirs $1 at the beginning of each year forever,…

A: In this question we need to calculate the Present value of perpetuity i.e. amount you will pay for…

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: A retired couple plans to supplement their retirement income with monthly withdrawals of the…

A: Retirement Income - It the amount deducted from the employee's current salary and to park in such…

Q: Holly Krech is planning for her retirement, so she is setting up a payout annuity with her bank. She…

A: Given: Holly Krech is planning for her retirement, so she is setting up a pay-out annuity with her…

Q: An engineer who is saving for her retirement plans to deposit $500 every quarter, starting quarter…

A: We have to calculate the future value of $500 paid every quarter for 25 years. Interest is 6%…

Q: Jordan's investment manager offers her an interest rate of 8.0% compounded monthly on her…

A: Earlier Interest rate is 8% Compounded monthly Interest rate changed to is 8% compounded annually…

Q: (Refer to this word problem In order to plan for their retirement, a married couple decides to…

A: Quarterly payment (Q) = P 50000 r = 8% per annum = 2% quarterly = 0.02 n = 10 years = 40 quarters

Q: Aylene is preparing for an income fund for her retirement. She wants to receive 15,000 pesos…

A: The present value is the value of the sum received at time 0. It is the current value of the sum…

Q: Jennifer's pension plan is an annuity with a guaranteed return of 6% per year (compounded monthly).…

A: The periodic payment is the amount that will be paid every period which includes the principal…

Q: To help out with her retirement savings, Kaitlin invests in an ordinary annuity that earns 2.4%…

A: Formula Annual payment = FV/((1+i)n-1)/i Where FV - Future value i.e. $98000 i - Interest rate i.e.…

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

A: Discount rate = 11%

Q: You deposit $13,000 annually into a life insurance fund for the next 10 years, after which time you…

A: The future value is the value of the amount in future that has to be paid or received at future.

Q: To help out with her retirement savings, Kaitlin invests in an ordinary annuity that earns 2.4%…

A: We will apply the required formula to calculate the quarterly payment, we will take the future value…

Q: When Jasmine retires she has $950,000 in a retirement account that earns 6% annual interest,…

A: Using PMT function in excel

Q: You decide to provide yourself with a retirement account by depositing X into an account at the…

A: An immediate annuity is an ordinary annuity where the payments start immediately after being…

Q: An engineer planning for her retirement will deposit 15% of her salary each year into a stock fund.…

A: The future value is the amount that will be received at the end of a certain period. In simple…

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: Rita desires to purchase an ordinary annuity that will pay her $4,000 a year for the next 20 years.…

A: The present value of the ordinary annuity table is used when the periodic payments are made at the…

Q: You estimate you need to supplement your social security payments with monthly withdrawals of…

A: Given: Monthly withdrawal = $3,420 Interest rate = 6.9% So, monthly interest rate = 0.069/12 = 0.58%…

Q: An insurance settlement of $2.5 million must replace Trixie Eden's income for the next 40 years.…

A: Annuity is the equal stream of cashflow at regular interval of time for a specified period. formula:…

Q: You estimate you need to supplement your social security payments with monthly withdrawals of…

A: The question is based on the concept present value of annuity payment Formula as, Pv=pmt*1-(1+r)-nr

Q: A retired couple plans to supplement their retirement income with monthly withdrawals of the…

A: In this question, the retired couple plans their income if they have a balance of 200000 in the…

Q: Josephine is considering purchasing an annuity with a rate of return of 6% compounded semi-…

A: Given: Interest rate =6% 20 equal payments at the beginning of the 6 months = $100 Next 20 equal…

Q: Linda expects to receive P35,569.22 , 9 years from now. How much should she invests for three…

A: Annuity is the series of payment made by an investor over the period of time to accumulate future…

Q: Jennifer opted for the plan that will pay her $ 52,000 annually for 15 years. The cash will be paid…

A: Honor code: Hi, there, thanks for posting the question. As per our Q&A honor code, we must…

Q: what is her payment?

A: Information Provided: Term = 20 years Present value = $1,000,000 Interest rate = 5% Ordinary…

Q: In the following ordinary annuity, the interest is compounded with each payment, and the payment is…

A: It can be solved using NPER function in excel. =NPER(rate,pmt,pv,[fv],[type]) Rate The interest…

Q: Assume that a pension plan offers to pay $500,000 on a person's retirement (his/her sixty-fifth…

A: a) An amount of $500,000 would be received on his 65th birthday or an equivalent annual payment…

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

A: Let the monthly deposit = M r = 2.4% per annum = 0.2% per month n = 14 years = 168 payments Future…

Q: An insurance settlement of $1 million must replace Trixie Eden's income for the next 45 years. What…

A: a) Since, the settlement is expected to provide an income at the end of each month, this is an…

Q: Diane wants to receive annuity payments of $2500 at the beginning of each quarter for eight years.…

A: The present value of annuity refers to the current value of the future payments from the payment…

Q: You would like to have enough money saved to receive a $90,000 per year perpetuity after retirement.…

A: Given, The cashflows is $90,000 The rate of interest is 8%

Q: Donald Johnson has just given an insurance company $20,000. In return, he will receive an annuity of…

A: The present value is the value of the sum received at time 0 or the current period. It is the value…

Q: As part of your retirement plan, you have decided to deposit $6,000 at the beginning of each year…

A: Answer 1) Calculation of worth of account after 10 years if the annual rate of interest is 3% Amount…

Q: Alice Longtree has decided to invest $430 quarterly for 4 years in an ordinary annuity at 8%. As her…

A: Annuity payments are the set of periodic payments that an investor makes into his investment account…

Q: Jennifer's pension plan is an annuity with a guaranteed return of 7% per year (compounded monthly).…

A: To Find: Monthly Payout or how much she will receive per month

Q: It is estimated that you will pay about $80,000 into the Social Security system (FICA) over your…

A: The future value is the value of the equal deposits at the end of the deposit period. The…

Q: Del Monty will receive the following payments at the end of the next three years: $20,000, $23,000,…

A: Present Value(PV) is worth of a future amount at current point of time. It is computed by…

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: Sherry expects to deposit $1000 now, $3000 4 years from now, and $1500 6 years from now and earn at…

A: Semi Annual Compounding Time Period = 10 years * 2 = 20 semi annual periods Interest Rate = 12%/2 =…

Q: How much money will he need to deposit into the annuity each quarter for the annuity to have a total…

A: Future Value of Ordinary Annuity: It represents the future value of the annuity cash flows made at…

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…

Q: Jennifer's pension plan is an annuity with a quaranteed return of 5% per year (compounded monthly).…

A: Monthly Deposit = 300 Time period of saving (N) = 45 years i.e. 540 months Time Period of Pension…

Q: Alicia's investment manager offers her an interest rate of 8.0% compounded monthly on her…

A: Annual deposit in case of monthly compounding:- Interest rate = 8%…

Concept explainers

Amortized Loans

The term "amortization" refers to spreading the value of a loan or a debt over a series of regular payments or installments comprising of both the principal and interest amount. It generally involves the process where in the value of a loan or an intangible asset is written down over its maturity period.

Question

A policyholder wishes to annuitize the cash value of her insurance policy at retirement. She desires an annual payment of $97.8,000 per year and the cash value is expected to be $1.5 million at retirement. Approximately how many payments can she expect to receive if annuity interest rates are 5.739 percent? (Do not round intermediate calculations. Round your answer to a whole number.)

Video Video

Expert Solution

This question has been solved!

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

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps with 1 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.
To help with her retirement savings, Isabel invests in an ordinary annuity that earns 5.4% interest, compounded quarterly. Payments will be made at the end of each quarter. How much money does she need to pay into the annuity each quarter for the annuity to have a total value of 96,000 pesos after 19 years? Do not round intermediate computations, and round your final answer to the nearest cent. If necessary, refer to the list of financial formulas.
Jennifer opted for the plan that will pay her $ 52,000 annually for 15 years. The cash will be paid at the end of each year Required A. Assuming that the interest will remain at 6.8 % constant over the whole period , how much will the insurance company disburse at the end of the 15 years of annuity payment to Jennifer? [ordinary annuity] B. If the payment of the cash flow is done in the beginning of the period , what will be the sum for the insurance company will disburse? [interest rate changes to 7.5%] C. If Jennifer is supposed to invest a sum at the beginning of the retirement in the annuity fund of the insurance , calculate the sum she has to give to the company if Payment is received at the end of each period and the interest rate is 4.8% Payment is done at the beginning of each period and the interest rate is 5.8% [ Annual payment = $52,000 and period is 15 years]
A retiree wants to purchase an annuity that will provide her with end-of-year payments for the next 30 years. She wants the first annual payment to be $15,000, and for the payments to grow by 3% each year thereafter. If she can earn 5.5% compounded annually on her investments, what is the purchase price of the annuity today
Emerson Cammack wishes to purchase an annuity contract that will pay him $7,000 a year for the rest of his life. The Philo Life Insurance Company figures that his life expectancy is 20 years, based on its actuary tables. The company imputes a compound annual interest rate of 6 percent in its annuity contracts. a. How much will Cammack have to pay for the annuity? b. How much would he have to pay if the interest rate were 8 percent?
A retired couple plans to supplement their retirement income with monthly withdrawals of the interest earned on a retirement account which has a balance of $200,000. a. If the fund earns interest monthly at an APR of 6%, which the couple always withdraws from the account, how much is generated in interest each month? Round/take your answer to the nearest cent. Recall that APR stands for Annual Percentage Rate. $ ? b. Estimate (to the nearest tenth of a percent) the annual interest rate needed for this couple to be able to earn $1,350 per month in interest from this $200,000 account. Round your answer to the nearest tenth of a percent, e.g., 2.5%. %-?