You want to buy an ordinary annuity that will pay you P4,000 a year for the next 20 years. You expect annual interest rates will be 8 percent over that time period. The maximum price you would be willing to pay for the annuity is closest to *
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Q: You want to buy an ordinary annuity that will pay you $4,000 a year for the next 20 years. You…
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A:
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Q: you want to buy an ordinary annuity that will pay you $4,000 a year for the next 20 years. You…
A: the maximum price you would be willing to pay for the annuity is its present value. in an ordinary…
Q: Your insurance company offered you an annuity that pays you $100 at the end of each year. The life…
A: An annuity is an agreement between an individual and an insurance company in which the individual…
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A: Present value of annuity is the present value of all the stream of cash flows that occur in future.…
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A: Present value of annuity = Amount of ordinary annuity x Cumulative present value factor (8%, 20…
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A: Monthly payment (M) = $890 n = 9 years = 108 months r = 8.13% per annum = 0.6775% per month
Q: Suppose you are going to receive $10,000 per year for 5 years. The appropriate interest rate is 11%.…
A: Here, Annuity Amount is $10,000 Time Duration is 5 years Interest Rate is 11%
Q: Suppose you put $ 600 a month for retirement into an annuity earning 7.5% compounded monthly. If you…
A: To calculate the number of years, excel NPER function is used.
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- How much must be invested now to receive $30,000 for 10 years if the first $30.000 is received one year from now and the rate is 8%?If you invest $15,000 today, how much will you have in (for further instructions on future value in Excel, see Appendix C): A. 20 years at 22% B. 12 years at 10% C. 5 years at 14% D. 2 years at 7%Define the stated (quoted) or nominal rate INOM as well as the periodic rate IPER. Will the future value be larger or smaller if we compound an initial amount more often than annually—for example, every 6 months, or semiannually—holding the stated interest rate constant? Why? What is the future value of $100 after 5 years under 12% annual compounding? Semiannual compounding? Quarterly compounding? Monthly compounding? Daily compounding? What is the effective annual rate (EAR or EFF%)? What is the EFF% for a nominal rate of 12%, compounded semiannually? Compounded quarterly? Compounded monthly? Compounded daily?
- Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $4,200 over the next 6 years when the interest rate is 8%, how much do you need to deposit in the account? B. If you place $8,700 in a savings account, how much will you have at the end of 12 years with an interest rate of 8%? C. You invest $2,000 per year, at the end of the year, for 20 years at 10% interest. How much will you have at the end of 20 years? D. You win the lottery and can either receive $500,000 as a lump sum or $60,000 per year for 20 years. Assuming you can earn 3% interest, which do you recommend and why?you want to buy an ordinary annuity that will pay you $4,000 a year for the next 20 years. You expect annual interest rates will be 8 percent over that time period. What is maximum price you would willing to pay for the annuityIf you buy an ordinary annuity that will pay you 4,000 a year for the next 20 years with an annual interest rates of 8 percent over that time period. The maximum price you would be willing to pay for the annuity is?
- You are offered an annuity that will pay $10,000 a year for ten years (that is, ten payments), but thepayments start after five years have elapsed. If you want to earn 8 percent on your funds, what is themaximum you should pay for this annuity?You may purchase an annuity that will pay you ¥300,000 in income per year starting one year from now and continuing for a total of 22 years, or 22 payments. Assuming an annual risk-free interest rate of 4%. What is a fair price for this annuity? Round your answer to the nearest yen