10 years from now Mr. X will start receiving a pension of $ 3000 a year for 16 years. How much the pension worth now if interest rate is 10%. Please mention the reasoning for number of terms chosen in every step.

10 years from now Mr. X will start receiving a pension of $ 3000 a year for 16 years. How much the pension worth now if interest rate is 10%. Please mention the reasoning for number of terms chosen in every step.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: You are going to receive $50 at the end of each year for the next 6 years. If you invest each of…

A: The future value of the annuity is the future worth of a cash flow series at a certain rate of…

Q: How many payments can Gabriel expect to receive in retirement? He expects to earn 7.04 percent in…

A: The concept of TVM refers to the interest-earning capacity of money because which money received…

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: You believe you will spend $44, 000 a year for 16 years once you retire in 32 years. If the interest…

A: TVM refers to the concept that considers the effect of money's interest-earning capacity, which…

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: Victoria (age 65) is about to begin receiving a CPP retirement pension of $11,000 per year. This…

A: The answer provided below has been developed in a clear step by step manner.Present Value of a…

Q: If Mr. Peter Parker gets a pension contribution each year BDT 20000 , how many years it will need…

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

Q: Dylan is setting up an income fund for his retirement. He would like to receive $12000 every 6…

A: The Present Value of Ordinary Annuity refers to the concept which gives out the discounted or…

Q: Find the amount needed to deposit into an account today that will yield a typical pension payment of…

A: The calculation of present value of future cash flows is reflective of calculation of present sum of…

Q: You intend to make the annual maximum contribution of $6,000 to your Roth IRA (individual retirement…

A: Maximum Contribution per Year(PMT) is $6000 Time Period(NPER) is 30 years Rate is 10 years To…

Q: what amount will he have in his retirement plan at the end of 15 years? Assume his plan will earn…

A: Time value of money (TVM) refers to the method or concept which is used to determine the amount of…

Q: A couple will retire in 50 years, they plan to spend about 000 a year (in current dollars) in…

A: Annual savings refers to an amount that is kept aside or invested in some plan for the purpose of…

Q: Jami Minard wants to receive an annuity of $8,000 at the beginning of each year for the next 10…

A: Annuity refers to a contract between an individual and an insurance company under which a desired…

Q: You plan to make your first $6,470 contribution to your individual retirement account in 2 years.…

A: Future value refers to the value of a current asset at some future date affected by interest rate,…

Q: Claire Fitch is planning to begin an individual retirement program in which she will invest $2,200…

A: The future value of an investment forecasts the expected value of an investment at a given future…

Q: sume you have just found out you are entitle lling to take today in exchange for the future:

A: Answer : Future value = Present value * (1 + rate) ^Time Rate = 18% Time = 19 years

Q: A couple will retire in 50 years; they plan to spend about $32,000 a year (in current dollars) in…

A: Annual savings refers to an amount that is kept aside or invested in some plan for the purpose of…

Q: Your pension plan is an annuity with a guaranteed return of 5.8% per year (compounded quarterly).…

A: To solve this problem, we need to break it down into two main parts:1. Accumulation Phase (Before…

Q: Engineer Pat want to have a pension from a fund that offers 6.5% interest to be compounded…

A: Annual withdrawal = P 150,000 Number of annual withdrawal = 15 Annual interest rate = 6.5% Quarterly…

Q: I would like to have $50,000 after retirement in 20 years 8 months from now. How much should I…

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

Q: CHAR is offered an annuity that will pay P24,000 per year for 11 years (the first payment will occur…

A: Annual payment (P) = P24,000 Period (n) = 11 Interest rate (r) = 13%

Q: Say that you plan to retire in 9 years. Starting today, you plan to make 9 annual contributions of…

A: Number of Payment = n = 9Payment = p = $6600Interest Rate = r = 6.7%special contribution = c =…

Q: Beginning a year from now, Bernardo O’Reilly will receive $20,000 a year from his pension fund.…

A: Present value is the current worth of future payments from the specific investment.…

Q: Your pension plan is an annuity with a guaranteed return of 4% per year (compounded quarterly). You…

A: Formula for Calculating Future Value = PMT [(1+i)n - 1] / i Here, PMT = 1600 i =…

Q: Mr Sam gets annual pension payments for the next 30 years. After the first payment, each subsequent…

A: Solution:- When a periodic amount is received each period at an equal growth rate, it is known as…

Q: You plan to retire in exactly20 years. Your goal is to create a fund that will allow you to receive…

A: Here, Amount of annuity = $200,000 Interest rate = 11% Years to death after retirement = 30 years…

Q: How many years would it take save an adequate amount for retirement if he deposits $2,100 per month…

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

Q: You expect to receive a payout from a trust fund in 3 years. The payout will be for $11,000. You…

A: Receipt in 3 years (I) = $11,000 Interest rate (r) = 0.065 Future value (FV) = $19,000 Period for…

Q: 1) Today is your 30th birthday and you must choose between two retirement options. The first option…

A: Since you have posted multiple questions, we will provide the solution only to the first question as…

Q: You are going to receive a payment at the end of each year for the next 12 years. If you invest each…

A: The future Value of an investment is an estimation of receiving some amount after some period of…

Q: You would like to provide $145,000 a year forever for your heirs. How much money must you deposit…

A: The perpetuity is a stream of cash flow which will be continuing forever and it will pay a certain…

Q: The Martinez are planning for a retirement home. They estimate they will need $212,000 4 years from…

A: Present Value:The present value refers to the value which is the current value computed for future…

Q: You will pay into a pension fund until you are aged 65. You are expected to live until your 80th…

A: Current age=21Retirement=65Period of deposit=44years=44 x 52/2=1144Period of…

Q: what is her payment?

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

Q: 4. Mr. Thomas will receive $8,500 a year for the next 15 years from her trust. If a 7 percent…

A: Introduction: The present value of annuity due refers to the current value of a series of future…

Q: You are offered an annuity that will pay $10,000 a year for ten years (that is, ten payments), but…

Q: Your retiring will be in 2036. You need to invest some money so that you can earn 10,000 per year…

A: The annuity value is determined with the help of company accumulating a fixed amount at particular…

Q: You are planning to retire in 20 years, and your goal is to accumulate a sum of $1 million in your…

A: In this question we require to compute the money to be invested each year to have $1 million in 20…

Q: Problem 2. Dean Sundaram is expected to retire in 30 years and he wishes to accumulate $800,000 in…

A: The future value function or concept can be used to determine the future value of a present sum or…

Q: An engineer planning for her retirement will deposit 10% of her salary each year into a stock found.…

A: Solution- Year 0 =20000 Year 1 =12000 Salery to increase at 5% so her saving will increase by 5% for…

Q: Jennifer's pension plan is an annuity with a guaranteed return of 4% per year compounded quarterly.…

A: A pension plan is a kind of retirement account that is being created by an individual who seeks…

Q: Suleman plans to fund his retirement plan and targeting to get OMR 50,000 at the end of 9th year,…

A: Computation:

Q: - Calculate the premium value. F

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Question

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: Introduction

VIEW

Step 2: calculation of the present value of Mr. X’s pension payments.

VIEW

Solution

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

To insure you, Assurances Nochance Ltd offers the following plan: you will pay 20 annual payments of $8,000 starting one year from today. Then, in year 21, you or your heirs will receive a pension for the following 15 years. The discount rate used by the company to calculate your pension is 6%. (a) What is the size of your annual pension? (b) Ifyoucouldtakeaone‐timelumpsumpayment25yearsfromtodayinsteadofthepension,how high would the equivalent lump sum payment have to be?.
Can you help me work out this problem in detail? Ben wants to receive $6,000 a year for 10 years. How much must he invest today in an annuity that pays 7% annually?
Peter intends to retire in 5 years. To supplement his pension he would like to receive $150 every months for 20 years. If he is to receive the first payment a month after his retirement and interest is 4.2% p.a. compounded monthly, how much must he invest today to achieve his goal?
if a client earns 100 000$ per annum now and is guaranteed of 5% increase over the 12 years to retirement, what will the retirement salary be?
For planning purposes, an individual wants to be able to spend $90,000 per year, at the end of each year, for an anticipated 30 years in retirement. In order to fund this retirement account, he plan to make annual deposits for 20 years at the end of his each working year. What is the amount he need deposit each year to fund his desired retirement spending? Use 10% as an annual simple rate for all calculations.
Help!!!!
Mr. Z is about to retire, and he wants to buy an annuity that will provide him with $57,000 of income per year for 20 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? Group of answer choices $539,410.19 $538,439.25 $585,260.05 $655,491.26 $561,849.65
Carlo Aldric wants to have P40,000 per year for 15 years during his retirement. What amount would you need to have invested at retirement to reach this goal if you could invest your money and receive a 5 percent return?
You plan on retiring in exactly 6 years and you would like to have a retirement fund balance of exactly $2,000,000 at that time. You are convinced that you can earn an APR (based on monthly compounding) of 5.1%. If you are making beginning-of-the-month payments into the account, how much does each one of the payments need to be in order to reach your target? To nearest $0.01
Please answer Logan is going to invest $61,000 and leave it in an account for 20 years. Assuming the interest is compounded continuously, what interest rate, to the nearest hundredth of a percent, would be required in order for Logan to end up with $103,000 ?
If a nurse invests $6,000 at the end of each year in her retirement account at 5% annual rate of return, what would her retirement account be worth if she retires in: (use spreadsheet)a. 20 yearsb. 30 yearsc. 35 yearsd. What if she deposits the $6,000 at the beginning of each year for 25 years?
Suppose Chris plans to make a $644 savings payment at the beginning of each month for 22 years with his first payment 10 years from today. Use this information and assume an interest rate of 5.91% per year to find the future value of his savings payments.