An insurer needs to make the following annuity payments to an individual: £744 paid at the beginning of each year for the first 5 years and then £654 paid at the beginning of each month for the next 5 years and then £798 paid at the beginning of each quarter for the following 8 years. Assuming a nominal rate of interest of 2.7% pa convertible quarterly throughout the entire period, how much total fund the insurer needs to hold today in order to meet these payments? Express your answer in £s to 2 decimal places. (correct answer: 53269.67) (need working out)

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
icon
Related questions
Question

An insurer needs to make the following annuity payments to an individual:

£744 paid at the beginning of each year for the first 5 years and then

£654 paid at the beginning of each month for the next 5 years and then

£798 paid at the beginning of each quarter for the following 8 years.

Assuming a nominal rate of interest of 2.7% pa convertible quarterly throughout the entire period, how much total fund the insurer needs to hold today in order to meet these payments? Express your answer in £s to 2 decimal places. (correct answer: 53269.67) (need working out)

Expert Solution
steps

Step by step

Solved in 3 steps with 2 images

Blurred answer
Follow-up Questions
Read through expert solutions to related follow-up questions below.
Follow-up Question

sorry but correct answer is 53269.67... can you try again? please

Solution
Bartleby Expert
SEE SOLUTION
Knowledge Booster
Annuity
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
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…
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