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? $886,219 $885,078 O $786,219 $896,219

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? $886,219 $885,078 O $786,219 $896,219

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 6MC: You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years....

See similar textbooks

Similar questions

You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years. Which table will help you determine the value of your account at the end of 12 years? A. future value of one dollar ($1) B. present value of one dollar ($1) C. future value of an ordinary annuity D. present value of an ordinary annuity
Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $4,200 over the next 6 years when the interest rate is 8%, how much do you need to deposit in the account? B. If you place $8,700 in a savings account, how much will you have at the end of 12 years with an interest rate of 8%? C. You invest $2,000 per year, at the end of the year, for 20 years at 10% interest. How much will you have at the end of 20 years? D. You win the lottery and can either receive $500,000 as a lump sum or $60,000 per year for 20 years. Assuming you can earn 3% interest, which do you recommend and why?
Suppose you wish to retire forty years from today. You determine that you need $50,000 per year once you retire, with the first retirement funds withdrawn one year from the day you retire. You estimate that you will earn 6% per year on your retirement funds and that you will need funds up to 25 years after retirement. Use the PV of an ordinary annuity due formula. a) Calculate the amount you must deposit in an account today so that you have enough funds for retirement b) Calculate the amount you must deposit each year, starting one year from today, so that you have enough funds for retirement.
You purchase an annuity that will pay you $100 every three months for five years. The first $100 payment will be made as soon as you purchases the investment. If your required rate of return is 9% , how much should you be willing to pay for this investment? Group of answer choices $1,596.82 $1,632.29 $1,759.34 $1,510.46
You are offered an annuity that will pay $11,000 per year for 24 years (the first payment will occur one year from today). If you feel that the appropriate discount rate is 12%, what is the annuity worth to you today? $914,490.09 $1.299,707.65 $95,902.77 $1,455,672.57 $85.627.47 You are told that if you invest $10,900 per year for 12 years (all payments made at the end of each year) you will have accumulated $670,000 at the end of the period. What annual rate of return is the investment offering? 29.99% 23.63% 20.63% 26.99% 33.44%
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? $785,302 $895,082 O $886,219 O $888,127
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
An investor is considering an annuity that pays $40,000 per year for four years. 1. Assuming the first $40,000 is paid in a years time given a discount rate of 4% what should the investor pay for this annuity today? 2. Assuming the first $40,000 is paid out immediately what should the investor pay today? (Asssume same discount rate). 3. If the investor pays $130,000 today and assuming the first paymentarrives in a years time, what would this investment’s internal rate of return be? (Asssume same discount rate). 4. What would the investor pay today if the first payment arrived in 5years time? (Asssume same discount rate). 5. If the investor invests $40,000 per year at the end of the next 4 years what would this be worth in 4 years time? (Asssume same discount rate).
When you retire, you plan to draw $50,000 per year from your retirement accounts, which will be earning 6% per year. Find PV Annuity: If you wish to do that for 10 years starting one year after you retire, what does the balance in your retirement account have to be when you retire? Find PV Annuity: If the account will be earning 3% per year, and you wish to do that for 20 years starting on the day you retire, what does the balance in your retirement account have to be when you retire?
It is estimated that you will pay about $80,000 into the Social Security system (FICA) over your 40-year work span. For simplicity, assume this is an annuity of $2,000 per year, starting with your 26th birthday and continuing through your 65th birthday. Solve, a. What is the future equivalent worth of your Social Security savings when you retire at age 65 if the government’s interest rate is 6% per year? b. What annual withdrawal can you make if you expect to live 20 years in retirement? Let i= 6% per year.
Your insurance agent is trying to sell you an annuity that costs $55,000 today. By buying this annuity, your agent promises that you receive payments of $285 per month for 30 years. What is the rate of return expressed as an APR on this investment? Multiple Choice O 3.91% 4.33% will
Choose the appropriate formula type for answering the following question: Suppose you want to have $410,500 for retirement in 15 years. Your account earns 6.5% interest. How much would you need to deposit in the account each month? Annuity Compound Interest Loan/Payout Annuity