Your insurance company offered you an annuity that pays you $100 at the end of each year. The life of the annuity is 10 years. Assume that market interest rate you can earn on similar risky investments is 8%.    What should be the present value of this annuity? If you are given the first payment immediately starting today, what should be the worth of this annuity? Which payment mode will you accept? What will be basis of your decision under time value of money concept?

Q: Assume you are planning to invest $200 each year for four years and will earn 8 percent per year.…

A: Excel Spreadsheet:

Q: You may purchase an annuity that will pay you 300000 in income per year starting one year from now…

A: Given, Payment amount (PMT) = 300,000 Number of payments (n) = 22 Interest rate (i) = 4%

Q: You have received a settlement from an insurance company which will pay you $100,000 per year for 12…

A: Present Value is the amount of money on hand currently, whereas future value is the amount of…

Q: You have set up a life annuity with a present value of $250,000. If your life expectancy at…

A: Using the PMT function in excel

Q: Suppose you invest in an annuity that pays 6% interest, compounded annually. You contribute $4,500…

A: Given information: Annuity payment is $4,500 Interest rate is 6% compounded annually Number of years…

Q: You have a chance to buy an annuity that pays $12,800 at the end of each year for 3 years. You could…

A: Annuity refers to the fixed periodic payments which can be paid weekly, monthly, quarterly,…

Q: An insurance annuity offers to pay you $1,000 per quarter for 20 years starting immediately. If you…

A: Excel Spreadsheet:

Q: Your investment advisor says you can buy an annuity now that will pay you $25,000 per year for the…

A: A theory that helps to compute the present or future value of the cash flows is term as the TVM…

Q: A new investment opportunity for you is an annuity that pays $800 at the beginning of each year for…

A: Beginning of period Annuity Annuity Amount = 800 Time Period (N) = 3 years Rate = 5.5%

Q: Mark Ventura has just purchased an annuity to begin payment at the end of 2011 (that is the date of…

A: Factor for a 10 year annuity when the approximate discount rate is 13%(5.426)The value of the…

Q: An investor is considering an annuity that pays $40,000 per year for four years.  1. Assuming the…

A: (answer of first 3 parts, please specify if any other part is required) We can compute the present…

Q: Calculate the future value of the following annuities, then answer the questions that follow. What…

A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…

Q: What will be the value in your account at the end of Year 30?

A: Future Value of Annuity: It represents the future worth of the annuity payments made for a given…

Q: A perpetuity will make its first payment in 20 years. The first payment will be $5,000, and future…

A: Perpetuity means a series of infinite numbers of payments of the same size occurs in an equal…

Q: You are considering investing in a security that will pay you $1000 in 30 years. If the appropriate…

A: Excel Spreadsheet:

Q: You want to buy an ordinary annuity that will pay you $4,000 a year for the next 20 years. You…

A: Ordinary Annuity = 4000 N = 20 years Interest Rate = 8%

Q: You begin saving for your retirement by investing $640 per month in an annuity with a guaranteed…

A: The question is based on the concept of future value of growing annuity with annual growth rate, the…

Q: If you set aside $5,000 per year (i.e., one deposit of $5,000 each year) in a Roth IRA for the next…

A: As per the facts, first contribution is done after one year so it is a case of Ordinary Annuity.…

Q: You are looking at two investment options, A and B. Investment A is a 13-year annuity that needs an…

A: Compounding: Compounding is the method through which interest is added to both the principle balance…

Q: An investment will provide you with $100 at the end of each year for the next 10 years. What is the…

A: Time period is 10years Discount rate is 8% Annuity amount per year is $100 To Find: Present Value…

Q: An investor requires an annual (year-end) income of $15,000 in perpetuity. Assuming a fixed rate of…

A: Information Provided: Yearly annual income = $15,000 Interest rate = 4%   NOTE: As per our…

Q: An investor requires an annual (year-end) income of $15,000 in perpetuity. Assuming a fixed rate of…

A: Information Provided: Annual income = $15,000 Interest rate = 4%   NOTE: As per our policy, we…

Q: If you buy an ordinary annuity that will pay you 4,000 a year for the next 20 years with an annual…

A: Annual payment (P) = 4000 Number of annual payments (n) = 20 Annual interest rate (r) = 8%

Q: Suppose you have an opportunity to buy an annuity that pays $3,500 at the end of each year for 6…

A: Present Value of Annuity=Annuity×1-11+ratetimerate

Q: In wisely planning for your retirement, you invest $12,000 per year for 20 years into a 401(k)…

A: Future worth is computed by multiplying the existing value with a given interest rate.

Q: you have a chance to buy an annuity that pays $1,000 at the end of each year for 5 years. You could…

A: The most we should pay for the annuity is nothing but the present value of annuity. Therefore, In…

Q: You purchase an annuity that will pay you $100 every three months for five years. The first $100…

A: FORMULA FOR PRESENT VALUE OF ANNUITY (FVA): PVA=A×1-1+rmm×nrm×1+rm where, A=annuity r=rate…

Q: You may purchase an annuity that will pay you ¥300,000 in income per year starting one year from now…

A: Annual income (P)= ¥300,000 Annual interest rate (R) = 4% Period (N) = 22 Years

Q: annuity offers to pay you $1,000 per quarter for 20 years. If you want to earn a rate of return of…

A: Answer: Calculation of the maximum amount that you are willing to pay as a lump sum today to obtain…

Q: Your insurance company offered you an annuity that pays you $100 at the end of each year. The life…

A: PV computes the existing value of future benefits by discounting future cash flows with a given…

Q: You are offered an annuity that will pay $11,000 per year for 24 years (the first payment will occur…

A: As per our guidelines we are supposed to answer only one question (if there are multiple questions…

Q: You want to buy an ordinary annuity that will pay you P4,000 a year for the next 20 years. You…

A: For calculating maximum price willing to pay today is calculated using Present value of annuity…

Q: You plan to place $1,200 per year into a Roth IRA. You expect to earn 6% APR and you will place this…

A: Given, The yearly deposit is $1,200 Rate is 6% Term of investment is 35

Q: You have a chance to buy an annuity that pays $2,500 at the end of each year for 3 years. You could…

A: Here, Annual Payment is $2,500 Interest Rate is 5.5% Time Period is 3 Years

Q: Suppose you are given a choice of the following two securities: (a) an annuity that pays $10,000 at…

A: PRESENT VALUE OF ANNUITY (PVA): PVA=A×1-11+RNR WHERE, A=ANNUITY R=RATE OF INTEREST N=NUMBER OF YEARS…

Q: What's the future value of a 12%, 5-year ordinary annuity that pays $700 each year? If this was an…

A: Given information: Annual payment is $700 Interest rate is 12% Number of years is 5

Q: To save for retirement, you decided to deposit $1000 into an IRA at the end of each year for the…

A: Future value can be referred to as the value of an underlying asset or security at a future date.…

Q: Assume that you just inherited an annuity that Will pay you 10,000 per year, with the first payment…

A: Present value of perpetuity = Annuity amount /rate of return  60,000 = 10,000 / rate of return  Rate…

Q: How much would Sally be willing to pay today for an annuity expected to pay $4,000 per year for 5…

A: As per the information provided:  Annuity expected - $4,000 Period - 5 years Return - 10%

Q: An insurance company offers you an end-of-year annuity of $48,000 per year for the next 20 years.…

A: With the Ordinary annuity or end of year annuity, payments begin at the end of a period.

Q: You want to invest 8000$ at an annual interest rate of 8% that compounds annually for 12 years.…

A: The future value of money concept is a fundamental concept of financial management. The future value…

Q: Your insurance agent is trying to sell you an annuity that costs $50,000 today. By buying this…

A: In finance annuity refers to that series of payments that are made/received at regular intervals.…

Q: I want to save for a vacation. My plan is to put $200.00 each month into an ordinary annuity that…

A: A study that proves that the 1value of money today is higher than the future value of money is term…

Q: Suppose you are going to receive $13,000 per year for 7 years. The appropriate interest rate is 8…

A: Present value of annuity is the present value of all the stream of cash flows that occur in future.…

Q: An annuity saleman showed up at your door and gave you the following offer: His company is willing…

A: using excel Rate function