After consulting with your financial advisor, you figured that you need $9,000 per year for your living during 35 years of the retirement period. You consider buying an annuity contract that will pay $9,000 at the beginning of every month. Assuming a rate of return of 12%, how much do you need today to buy the annuity due contract?

After consulting with your financial advisor, you figured that you need $9,000 per year for your living during 35 years of the retirement period. You consider buying an annuity contract that will pay $9,000 at the beginning of every month. Assuming a rate of return of 12%, how much do you need today to buy the annuity due contract?

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

See similar textbooks

Similar questions

You want to buy a $214,000 home. You plan to pay 10% as a down payment, and take out a 30 year loan at 5.6% interest for the rest.a) How much is the loan amount going to be?b) What will your monthly payments be?c) How much of the first payment is interest?
After consulting with your financial advisor, you figured that you need $9,000 per year for your living during 35 years of the retirement period. You consider buying an annuity contract that will pay $9,000 at the end of every month. Assuming a rate of return of 12%, how much do you need today to buy the ordinary annuity contract?
You expect to receive $150,000 per year on a contract that will last 5 years. You are trying to compare this offer to a lump sum payment. If you can earn 5% on your investments, how much is the contract worth to you today?
You are looking at two investment options, A and B. Investment A is a 15-year annuity that needs an end-of-month payment of $1,100 and has an APR of 9% compounded monthly. Investment B is also a 15-year investment, but a lump sum investment that has as an APR of 8% compounded daily. How much money do you need to invest in B today as a single lump sum amount if you wish to have the same wealth as in Investment A in 15 years? If Investment B, with 8% APR compounded daily, gave you the option of investing a constant amount at the end of every six months, what would this amount be in order to give you the same wealth as in A at the end of 15 years?
You want to buy a $194,000 home. You plan to pay 20% as a down payment, and take out a 3.3% APR loan for the rest. a) How much is the loan amount going to be? b) What will your monthly payments be if the length of the loan is 10 years? c) What will your monthly payments be if the length of the loan is 20 years? $ d) Over the course of the entire loan, how much more do you end up paying with the longer loan? (Hint: take the difference of the total amounts paid) $4 %24 %24 %24
If you are considering the purchase of a consol that pays $60 per year forever, and the rate of interest you want to earn is 10% per year, how much money should you pay for the consol?
Assume that you contribute $390 per month to a retirement plan for 15 years. Then you are able to increase the contribution to $780 per month for another 25 years. Given a 6.0 percent interest rate, what is the value of your retirement plan after the 40 years?
Explain well with proper answer.
Assume that you contribute $150 per month to a retirement plan for 20 years. Then you can increase the contribution to $258 per month for another 20 years, and finally, $408 per month for the last 10 years. Given a 7 percent interest rate, what is the value of your retirement plan after the 50 years?
you need $8,000 four years from now for a down payment on your future house. How much money must you deposit today if your credit union pays 5% interest compounded annually? Pick the closest answer.
You want to buy a $205,000 home. You plan to pay 10% as a down payment, and take out a 30 year loan at 4.15% interest for the rest. a) How much is the loan amount going to be? b) What will your monthly payments be? c) How much of the first payment is interest?
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?

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS