Assume that the Canada Pension Plan promises you $20,000 per year starting when you retire 45 years from today (the first $20,000 will come 45 years from now). If your discount rate is 7%, compounded annually, and you plan to live for 15 years after retiring (so that you will get a total of 16 payments, including the first one), what is the value today of Canada Pension Plan's promise? The value today of the Canada Pension Plan's promise is $ (Round to the nearest dollar.)

Assume that the Canada Pension Plan promises you $20,000 per year starting when you retire 45 years from today (the first $20,000 will come 45 years from now). If your discount rate is 7%, compounded annually, and you plan to live for 15 years after retiring (so that you will get a total of 16 payments, including the first one), what is the value today of Canada Pension Plan's promise? The value today of the Canada Pension Plan's promise is $ (Round to the nearest dollar.)

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

•An insurance company offers to pay you $1,000 per year for 10 years if you will pay $6,710 up front. What rate is implicit in this 10-year annuity?
What is the value today of $3,200 per year, at a discount rate of 10 percent, if the first payment is received 6 years from today and the last payment is received 20 years from today?
Can you show calculations for this? A five-year annuity of 10 $7,500 semiannual payments will begin 10 years from now, with the first payment coming 10.5 years from now. If the discount rate is 6 percent compounded monthly, what is the value of this annuity five years from now? What is the value three years from now? What is the current value of the annuity?
Value of a retirement annuity. Your bank manager has informed you about a new investment plan that will provide you with $5,000 at the end of each of the next 20 years. If you have an opportunity to earn a guaranteed return of 6%, what is the most you would pay for this annuity right now?
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What's the future value of a 12%, 5-year ordinary annuity that pays $700 each year? If this was an annuity due, what would its future value be? Round your answers to the nearest cent.
Suppose that you have inherited an annuity that will initially pay $1,755 six years from now. Each of the following 30 annual payments will be 3% larger than the prior payment. Assuming that the annual opportunity cost of capital is 7%, what is the value of this annuity today? Round your final answer to two decimals.
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To insure you, Assurances Nochance Ltd offers the following plan: you will pay 20 annual payments of $8,000 starting one year from today. Then, in year 21, you or your heirs will receive a pension for the following 15 years. The discount rate used by the company to calculate your pension is 6%. (a) What is the size of your annual pension? (b) Ifyoucouldtakeaone‐timelumpsumpayment25yearsfromtodayinsteadofthepension,how high would the equivalent lump sum payment have to be?.
Future value of an ordinary annuity: Robert Hobbes plans to invest $25,000 a year at the end of each year for the next seven years in an investment that will pay him a rate of return of 11.4 percent. How much money will Robert have at the end of seven years? Could you please show the formula that would be used if using excel is for either FV or however it is set up. Thanks
Interest rate with annuity. What are you getting in terms of interest rate if you are willing to pay $10,000 today for an annual stream of payments of $2,100 for the next 25 years? The next 50 years? The next 125 years? Forever?
My pension plan will pay me $10,500 once a year for a 10-year period. The first payment will come in exactly five years. The pension fund wants to immunize its position. Required: a. What is the duration of its obligation to me? The current interest rate is 5.0% per year. b. If the plan uses 5-year and 20-year zero-coupon bonds to construct the immunized position, how much money ought to be placed in each bond? c. What will be the face value of the holdings in each zero? Complete this question by entering your answers in the tabs below. Required A Required B Required C What is the duration of its obligation to me? The current interest rate is 5% per year. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Duration years

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