Are annuities good investments? To answer this question, consider the situation of John. He is 50 years old and can purchase a lifetime annuity for $100,000. The annuity pays John $8,000 per year for the rest of his life. If John lives to be 85, what rate of return will he earn on this investment? What if John only lives to be 77? If John lives to age 85, his IRR is If John lives to age 77, his IRR is % per year. (Round to two decimal places.) % per year. (Round to two decimal places.)

Are annuities good investments? To answer this question, consider the situation of John. He is 50 years old and can purchase a lifetime annuity for $100,000. The annuity pays John $8,000 per year for the rest of his life. If John lives to be 85, what rate of return will he earn on this investment? What if John only lives to be 77? If John lives to age 85, his IRR is If John lives to age 77, his IRR is % per year. (Round to two decimal places.) % per year. (Round to two decimal places.)

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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Similar questions

Only by formula please!!! Linda is saving for retirement and would like to accumulate $750,000 at her retirement. She currently has $40,000 saved and would like to work for another 30 years. She plans to save $5000 at the end of each year over the next 30 years. What rate of return must she earn on her investments over the next 30 years?
Sam invests $100 each month into his retirement account. He wants to determine how much will accumulate in his retirement account if he invests for the next 10 years if he can get a 6% return. How would he do this? Group of answer choices This is a future value of an annuity with a .5% interest rate and 120 payments This is a future value of $1 with an interest rate of 6% and 10 time periods. This is a future value of $1 with an interest rate of .5% and 120 time periods. This is a future value of an annuity with a 6% interest rate and 10 payments
An individual has determined utilizing the annuity method of capital needs analysis that he needs $1,045,656 at the beginning of his retirement to meet his retirement life expectancy goals. If this individual would like to be more conservative in his retirement planning forecast and maintain this capital balance throughout his retirement life expectancy of 32 years, given an expected earnings rate of 6%, and an inflation rate of 3% during the period, how much more would he need to have at the beginning of his retirement?
Mohammed is 65 years of age and has a life expectancy of 12 more years. He wishes to invest $40,000 in an annuity that will make a level payment at the end of each year until his death. If the interest rate is 10%, what income can Mr. Mohammed expect to receive each year? (Choose the correct answer from below options and attach all your explanations in the other link provided) Select one: a. 27256 b. 272 c. 2725 d. 272560
Jackie wants to retire with $ 2.1 million in savings by the time she turns 64. She is currently 23 years old. How much will she need to save each year, assuming she can get a 10% annual return on her investments? (show all inputs in your answer Training )M = N = I = PV = PMT = FV =
Sarah Wiggum would like to make a single investment and have $1.2 million at the time of her retirement in 30 years. She has found a mutual fund that will earn 4 percent annually. How much will Sarah have to invest today? If Sarah invests that amount and could earn a 14 percent annual return, how soon could she retire, assuming she is still going to retire when she has $1.2 million? Click on the table icon to view the PVIF table To have $1.2 million at retirement, the amount Sarah must invest today is $ (Round to the nearest cent.)
Your brother plans to start investing. He will invest $655 today; $1073 in 3 year and $1280 in 6 years. How much will he have in 14 years if he earns a 11.2% rate of interest? Answer:
Your grandparents would like to establish a trust fund that will pay you and your heirs $135,000 per year forever with the first payment 12 years from today If the trust fund earns an annual return of 26 percent, how much must your grandparents deposit today?
In this question, consider that you are 60 years old and considering retirement. An insurance company offers to sell you the following Annuity in exchange for a portion of your IRA: • The Annuity commits to paying you 2,000 per month for the next 20 years, with the first payment to be made beginning one month from today. • Your price of the Annuity is $250,000 paid by you today from your IRA. The insurance company is rated AAA, but the investment is not FDIC insured like bank deposits. What is the expected annual rate of return on this investment? What is the Yield-on this investment? That is what is the annual expected rate of return? From an investment point of view, do you consider this a good investment today? Discuss why, or why not.

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