A company offers a life annuity-due which makes the following annual payments:• $2000 at ages 40 to 47;• $3850 at ages 48 to 53;• $5450 at ages 54 to 60.Consider the following life table:Age (x)Age (x)Age (x)407013647640285458667416935648627925557908426895449619825657128436726850610555756038446608851597555855658456573352594005954953466474853590616054839Compute the expected present value of this life annuity-due if it is purchased by an annuitant aged 50 using an effective annual interest rate i = 0.052:

An annuity is a financial product that involves a series of regular cash flows or payments received…

A company offers a life annuity-due which makes the following annual payments: $2000 at ages 40 to 47; $3850 at ages 48 to 53; $5450 at ages 54 to 60. Consider the following life table: Age (x) 40 41 42 43 44 45 46 Ix 70136 69356 68954 67268 66088 65733 64748 Age (x) 47 48 49 50 51 52 53 lx Age (x) 54 55 56 57 58 64028 62792 61982 61055 59755 59400 59061 59 60 lx 58667 57908 57128 56038 55658 54953 54839 Compute the expected present value of this life annuity-due if it is purchased by an annuitant aged 50 using an effective annual interest rate i = 0.052:

A company offers a life annuity-due which makes the following annual payments: $2000 at ages 40 to 47; $3850 at ages 48 to 53; $5450 at ages 54 to 60. Consider the following life table: Age (x) 40 41 42 43 44 45 46 Ix 70136 69356 68954 67268 66088 65733 64748 Age (x) 47 48 49 50 51 52 53 lx Age (x) 54 55 56 57 58 64028 62792 61982 61055 59755 59400 59061 59 60 lx 58667 57908 57128 56038 55658 54953 54839 Compute the expected present value of this life annuity-due if it is purchased by an annuitant aged 50 using an effective annual interest rate i = 0.052:

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Complete the ordinary annuity. (Please use the following provided Table.) Note: Do not round intermediate calculations. Amount of payment Payment payable Years Interest rate Value of annuity $ 5,000 Annually 11 4 %
Following is a table for the present value of $1 at compound interest: Year 6% 10% 12% 1 0.943 0.909 0.893 2 0.890 0.826 0.797 3 0.840 0.751 0.712 4 0.792 0.683 0.636 5 0.747 0.621 0.567 Following is a table for the present value of an annuity of $1 at compound interest: Year 6% 10% 12% 1 0.943 0.909 0.893 2 1.833 1.736 1.690 3 2.673 2.487 2.402 4 3.465 3.170 3.037 5 4.212 3.791 3.605 Using the tables provided, the present value of $57,000 (rounded to the nearest dollar) to be received 3 years from today, assuming an earnings rate of 6%, is a.$71,501 b.$152,361 c.$47,880 d.$57,000
Use the following Annuity Table for questions 1 through 6. Future Value of Ordinary Annuity of 1 Period 5% 6% 8% 10% 12% 11.000001.000001.000001.000001.00000 22.050002.060002.080002.100002.12000 33.152503.183603.246403.310003.37440 44.310134.374624.506114.641004.77933 55.525635.637095.866606.105106.35285 66.801916.975327.335927.715618.11519 78.142018.393848.922809.4871710.08901 89.549119.8974710.6366311.4358912.29969 911.0265611.4913212.4875613.5794814.77566 1012.5778913.1807914.4865615.9374317.54874 Present Value of an Ordinary Annuity of 1 Period 5% 6% 8% 10% 12% 1.95238.94340.92593.90909.89286 21.859411.833391.783261.735541.69005 32.723252.673012.577102.486852.40183 43.545953.465113.312133.169863.03735 54.329484.212363.992713.790793.60478 65.075694.917324.622884.355264.11141 75.786375.582385.206374.868424.56376 86.463216.209795.746645.334934.96764 97.107826.801696.246895.759025.32825 107.721737.360096.710086.144575.65022 Use the following…
Following is a table for the present value of $1 at compound interest: Year 6% 12% 1 0.943 0.909 0.893 2 0.890 0.826 0.797 3 0.840 0.751 0.712 4 0.792 0.683 0.636 5 0.747 0.621 0.567 Following is a table for the present value of an annuity of $1 at compound interest: Year 6% 10% 1 0.943 0.909 2 1.833 1.736 3 2.673 2.487 4 3.465 3.170 4.212 3.791 10% 12% 0.893 1.690 2.402 3.037 5 3.605 Using the tables provided, the present value of $15,007 (rounded to the nearest dollar) to be received 4 years from today, assuming an earnings rate of 10%, is Oa. $11,886 Ob. $47,572 Oc. $10,250 Od. $15,007
Estimating the annual interest rate with an ordinary annuity. Fill in the missing annual interest rates in the following table for an ordinary annuity stream: Number of Payments or Years 10 19 25 80 Annual Interest Rate % (Round to two decimal places.) % (Round to two decimal places.) % (Round to two decimal places.) % (Round to two decimal places.) Future Value $0.00 $12,286.30 $0.00 $1,435,078.21 C Annuity Present Value $580.00 $444.01 $1,985.57 $450.00 $2,298.49 $0.00 $37,000.00 $0.00
An annuity-due makes payments of $15 every other year, with the first payment beginning immediately. The annuity-due makes ten payments. The nominal annual interest rate compounded semiannually is 5%. Calculate the present value of the annuity due. a. 100.0958 O b. 93.2775 O c. 66.7310 d. 124.3700 O e. 133.4620
For each of the following annuities, calculate the annuity payment. Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. Annuity Payment Future Value $ $ $ $ 25.450 1,090,000 928,000 145,000 Years 8 39 25 14 Interest Rate 4% 6 7
Following is a table for the present value of $1 at compound interest: Year 6% 10% 12% 1 0.943 0.909 0.893 2 0.890 0.826 0.797 3 0.840 0.751 0.712 4 0.792 0.683 0.636 5 0.747 0.621 0.567 Following is a table for the present value of an annuity of $1 at compound interest: Year 6% 10% 12% 1 0.943 0.909 0.893 2 1.833 1.736 1.690 3 2.673 2.487 2.402 4 3.465 3.170 3.037 5 4.212 3.791 3.605 Using the tables provided, if an investment is made now for $20,000 that will generate a cash inflow of $7,000 a year for the next 4 years, the present value of the investment cash inflows, assuming an earnings rate of 12%, is Group of answer choices $3,969 $22,190 $21,259 $20,352
Following is a table for the present value of $1 at compound interest: Year 6% 10% 12% 1 0.943 0.909 0.893 2 0.890 0.826 0.797 3 0.840 0.751 0.712 4 0.792 0.683 0.636 5 0.747 0.621 0.567 Following is a table for the present value of an annuity of $1 at compound interest: Year 6% 10% 12% 1 0.943 0.909 0.893 2 1.833 1.736 1.690 3 2.673 2.487 2.402 4 3.465 3.170 3.037 5 4.212 3.791 3.605 Using the tables provided, if an investment is made now for $23,500 that will generate a cash inflow of $8,000 a year for the next 4 years, the net present value of the investment, assuming an earnings rate of 10%, is Group of answer choices $23,500 $16,050 $1,860 $25,360
Below is a table for the present value of $1 at Compound interest. Year 6% 10% 12% 1 0.943 0.909 0.893 2 0.890 0.826 0.797 3 0.840 0.751 0.712 4 0.792 0.683 0.636 5 0.747 0.621 0.567 Below is a table for the present value of an annuity of $1 at compound interest. Year 6% 10% 12% 1 0.943 0.909 0.893 2 1.833 1.736 1.690 3 2.673 2.487 2.402 4 3.465 3.170 3.037 5 4.212 3.791 3.605 Using the tables above, what is the present value of $6,573.00 (rounded to the nearest dollar) to be received at the end of each of the next 4 years, assuming an earnings rate of 12%? a.$19,962 b.$23,696 c.$6,573 d.$15,788
What is the present value of an ordinary annuity that pays $1,000 per year for 4 years, assuming the annual discount rate is 7 percent? a. $3,051.58 b. $762.90 c. $3,624.32 d. $3,738.32 e. $3,387.21
Following is a table for the present value of $1 at compound interest: Year 6% 10% 12% 1 0.943 0.909 0.893 2 0.890 0.826 0.797 3 0.840 0.751 0.712 4 0.792 0.683 0.636 5 0.747 0.621 0.567 Following is a table for the present value of an annuity of $1 at compound interest: Year 6% 10% 12% 1 0.943 0.909 0.893 2 1.833 1.736 1.690 3 2.673 2.487 2.402 4 3.465 3.170 3.037 5 4.212 3.791 3.605 Using the tables provided, the present value of $6,000 to be received at the end of each of the next 4 years, assuming an earnings rate of 10%, is Group of answer choices $25,272 $19,020 $20,790 $14,412

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