After consulting with your financial advisor, you figured that you need $100,000 per year for your living during 35 years of the retirement period. You consider buying an annuity contract that will pay $100,000 at the end of every year. Assuming a rate of return of 8%, how much do you need today to buy the ordinary annuity contract? O $1,455,457 $1,165,980 $1,165,457 O $1,133,457

After consulting with your financial advisor, you figured that you need $100,000 per year for your living during 35 years of the retirement period. You consider buying an annuity contract that will pay $100,000 at the end of every year. Assuming a rate of return of 8%, how much do you need today to buy the ordinary annuity contract? O $1,455,457 $1,165,980 $1,165,457 O $1,133,457

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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Value of a retirement annuity. Personal Finance Problem An insurance agent is trying to sell you an annuity, that will provide you with $ 14,000 at the end of each year for the next 15 years. If you don't purchase this annuity, you can invest your money and earn a return of 8%. What is the present value of the annuity?
(Annuity interest rate) Your folks just called and would like some advice from you. An insurance agent just called them and offered them the opportunity to purchase an annuity for $36,828.58 that will pay them $4,000 per year for 20 years. They don't have the slightest idea what return they would be making on their investment of $36,828.58. What rate of return would they be earning? The annual rate of return your folks would be earning on their investment is%. (Round to two decimal places.)
Assume that Social Security promises you $43,000 per year starting when you retire 45 years from today (the first $43,000 will get paid 45 years from now). If your discount rate is 5%, compounded annually, and you plan to live for 17 years after retiring (so that you will receive a total of 18 payments including the first one), what is the value today of Social Security's promise? ... The value today of Social Security's promise is $ the nearest cent.) (Round to
You buy an annuity that will pay you $24,000 annually for 25 years. The payments are paid on the first day of each year. What is the value of this annuity today if the discount rate is 8.5 percent? 241309 266498 258319 251409 245621 A O BO .C DO E O
You are offered an annuity that will pay $5,420 per quarter for 8 years (first payment made today). If you feel that the appropriate discount rate is 13%, what is the annuity worth to you today?
C) What is the present value of $7,500 per year, at a discount rate of 8.5 percent, if the first payment is received 10 years from now and the last payment is received 25 years from now?You have signed up for your 401k and will deposit $750 into your 401k when you are paid at the end of each month. If you earn a compound annual rate of return of 6%, how much will you have in 15 years?What would your monthly car payment be if you financed a $35,000 car for 3 years at a rate of 6%?The appropriate discount rate for the following cash flows is 12 percent compounded quarterly. What is the present value of the cash flows? Year 1 CF=700, Year 2 CF=600, Year 3 CF=0, Year 4 CF=1000
After retirement, you expect to live for 25 years. You would like to have $90,000 in income each year. How much should you have saved in your retirement account to receive this income if the annual interest rate is 9 percent per year? (Assume that the payments start one year after your retirement.) Multiple Choice $884,032.16 $99.986.08 $2,250,000.00 $1,456,153.94
You want to buy an ordinary annuity that pays you $4000 annually for the next 20 years. The annual interest rate is expected to be 8% over this 20-year period. The price you would be willing to pay for the annuity is: $32000. $39272. $40000. $80000.
You are offered an annuity that will pay $14,000 per year for 13 years (the first payment will be made today). If you feel that the appropriate discount rate is 8%, what is the annuity worth to you today? $110,652.86 $300,934.15 $119.505.09 $325,008.88 $242,876.85 4.0
You are trying to decide how much to save for retirement. Assume you plan to save $4,000 per year with the first investment made one year from now. You think you can earn 10.5% per year on your investments and you plan to retire in 36 years, immediately after making your last $4,000 investment. a. How much will you have in your retirement account on the day you retire? b. If, instead of investing $4,000 per year, you wanted to make one lump-sum investment today for your retirement that will result in the same retirement saving, how much would that lump sum need to be? c. If you hope to live for 28 years in retirement, how much can you withdraw every year in retirement (starting one year after retirement) so that you will just exhaust your savings with the 28th withdrawal (assume your savings will continue to earn 10.5% in retirement)? d. If, instead, you decide to withdraw $270,000 per year in retirement (again with the first withdrawal one year after retiring), how many years will it…
Assume that Social Security promises you $47,000 per year starting when you retire 45 years from today (the first $47,000 will get paid 45 years from now). If your discount rate is 6%, compounded annually, and you plan to live for 12 years after retiring (so that you will receive a total of 13 payments including the first one), what is the value today of Social Security's promise? The value today of Social Security's promise is $ (Round to the nearest cent.)
You have a chance to buy an annuity that pays $25,000 at the beginning of each year for 10 years. You could earn 8.5% on your money in other investments with equal risk. What is the most you should pay for the annuity? You are not required to show calculations but you must list the inputs used such as N, PV, FV, etc. O $346,484.41 O $177,976.57 O $164,033.70

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