Chapter 5 problems

Perpetuity: Your grandfather is retiring at the end of next year. He would like to ensure that his heirs receive payments of $10,000 a year forever, starting when he retires. If he can earn 6.5 percent annually, how much does your grandfather need to invest to produce the desired cash flow? Please use Excel to solve

Using the time value of money Your grandfather would like to share some of his fortune with you. He offers to give you money under one of the following scenarios (you get to choose): |1. $8,750 per year at the end of each of the next seven years 2. $50,050 (lump sum) now 3. $100,250 (lump sum) seven years from now Requirement 1. Calculate the present value of each scenario using a 6% discount rate. Which scenario yields the highest present value? Round to nearest whole dollar. 2. Would your preference change if you used a 12% discount rate?

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

Your uncle Barry is about to retire, and he wants to buy an annuity that will provide him with $77,000 of income a year for 25 years, with the first paying coming immediately and future payments occurring at the BEGINNING of the respective years. The interest rate on this annuity is 8.50%. How much would it cost him to buy the annuity today? (Ch. 5) Group of answer choices $957,617.32 $820,814.85 $855,015.47 $786,614.23 $788,032.69

Jane Bauer has won the lottery and has the following four options for receiving her winnings: Receive $100,000 at the beginning of the current year Receive $108,000 at the end of the year Receive $20,000 at the end of each year for eight years Receive $10,000 at the end of each year for 30 years Jane can invest her winnings at an interest rate of 8% compounded annually at a major bank. Use the appropriate present or future value table: FV of $1, PV of $1, FV of Annuity of $1 and PV of Annuity of $1 Calculate the Present value for each of the above options. Round all answers to the nearest dollar.   Present Value Option 1 $fill in the blank 1 Option 2 $fill in the blank 2 Option 3 $fill in the blank 3 Option 4 $fill in the blank 4 Which of the payment options should Jane choose?

6) Jia has just won a $20 million lottery, which will pay her $1 million at the end of each year for 20 years. An investor has offered her $10 million for this annuity. She estimates that she can earn 10 percent interest, compounded annually, on any amounts she invests. She asks your advice on whether to accept or reject the offer. What will you tell her? (Ignore Taxes) Policy A: You will receive equal annual payments of $10,000 beginning 35 years from now for 10 years. Policy B: You will receive one lump-sum of $100,000 in 40 years from now. Which policy would you choose? Assume rate of interest is 6 percent

? You would like to have enough money saved to receive a $53,000 per year perpetuity after retirement. How much would you need to have saved in your retirement fund to achieve this goal? Assume that the perpetuity payments start on the day of your retirement. The annual interest rate is 8 percent. O -00 Multiple Choice $715,500 $1,060,000 $530,000

Help!!!!

Your girlfriend just won the Florida lottery. She has the choice of $10,700,000 today or a 20-year annuity of $1,050,000, with the first payment coming one year from today. What rate of return is built into the annuity? Disregard taxes.   a. 6.08%   b. 7.51%   c. 8.71%   d. 7.43%   e. 5.93%

If Jennifer contributes $500 every quarter into her superannuation fund for the next 45 years, how much will she accumulate assuming she can earn 8% p.a. and the first contribution is made immediately? Select one: a. $858,020.78 b. $652,810.16 c. $90,000.00 d. $875,181.20

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1. Paulo won the lottery. He is offered a series of payments of $100,000 per year for 10 years. What is the present value of these payments at an interest/discount rate of 6%? PV = FV = 1 = N = Pmt= Answer: 2. Keesha's grandmother died and left a trust for her that pays out $2,000 per month for 15 years. If Keesha invests the payments at 8%, what will her future value be? PV = FV = 1= N= Pmt= Answer:

Cammie won the lottery. She can take a single lump sum payout of $10 million dollars or receive $750,000 per year, beginning immediately, for the next 25 years. What rate of return would Cammie need to break even if she took the lump sum amount instead of the annuity? O 5.31% O 6.19 % O 4.98% 5.56%

You would like to give your daughter $75,000 towards her college education 16 years from now. How much money must you set aside today for this purpose if you can earn 8 percent on your investments? Group of answer choices $28,417.67 $18,388.19 $29,311.13 $21,891.79 $20,270.17

If Maggie has $5,000 to invest and wants to have $10,000 at the end of 9 years, what interest rate must she earn on her money, assuming annual compounding? Select one: a. 5% b. 6% с.790 d. 8% e. None of the above O

On a whim you purchased a scratch−off lottery ticket at the gas station. It must have been your lucky day because you won $3,000,000. Being logical and rational you decide to invest the money at 5​% for 14 years until you are ready to start a family. At the end of 14 ​years, how much will your investment be​ worth? -the future value of​ $1 table -the future value of annuity of​ $1 table

Please answer question 13 first and then 12 and 11. Thank you

Your father is considering purchasing an annuity that pays $5,000 at the beginning of each year for 5 years. He could earn 4.5% on his money in other investments with equal risk. What is the most he should pay for the annuity? 20,701 $21,791 $22,938 $24,085 $25,289

Assume that you just won the state lottery. Your prize can be taken either in the form of 100,000 at the end of each of the next 15 years or as a single amount of $1,000,000 paid immediately. If you expect to be able to earn 5% annually on your investments, ignoring taxes and other considerations, which alternative should you take? Why?

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