Aunt May will start receiving quarterly pension ($5000 quarterly paycheck) beginning one quarter from now. The pension will continue for the next 25 years. The quarterly paycheck will increase by 5% each year to adjust for inflation. What is the total value of Aunt May's pension as of today, assuming a nominal interest rate of 6% compounded monthly? A. Between $350,000 and $380,000 B. Between $380,000 and $400,000 C. Between $400,000 and $420,000 D. Between $420,000 and $440,000 E. More than $440,000

Aunt May will start receiving quarterly pension ($5000 quarterly paycheck) beginning one quarter from now. The pension will continue for the next 25 years. The quarterly paycheck will increase by 5% each year to adjust for inflation. What is the total value of Aunt May's pension as of today, assuming a nominal interest rate of 6% compounded monthly? A. Between $350,000 and $380,000 B. Between $380,000 and $400,000 C. Between $400,000 and $420,000 D. Between $420,000 and $440,000 E. More than $440,000

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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b. Jason, a bachelor at age 65, has decided to convert the cash value of his life insurance policy into a quarterly fixed-payment annuity that will last for 20 years. Suppose that the cash value of Jason's life insurance policy is $2,000,000. The rate of return is guaranteed at 13% compounded quarterly. The first quarterly annuity payment will start 3 months later in next quarter. Find the quarterly payment that Jason will receive in each quarter of the following 20-years. Show all your calculations
Find the amount needed to deposit into an account today that will yield a typical pension payment of $20,000 at the end of each of the next 17 years for the given annual interest rate. (Round your answer to the nearest cent.) 5.9%
Sara deposits $500 per month into an annuity. The annuity earns 5%.interest.compounded monthly. If she does this for 30 years, how much is in the annuity? Round to nearest whole dollar. S Enter a number, Submit Answer
Today is January 1, 2022. Roy will use a single premium to purchase an annuity today. This annuity pays $10,000 at the end of each year while Roy is alive. The estimated probability of Roy surviving for the next 4 years is stated in following table. The yield rate is assumed to be j₁ = 4.5% p.a. Calculate the premium value. Round your answer to three decimal places. Year 1 2 3 4 Probability of surviving from start of year to end of year a. $17490.442 b. $19100.000 c. $14729.264 d. $17651.074 0.83 0.62 0.46 0 Today is 1 July, 2022, Georg plans to purchase a corporate bond with a coupon rate of j2 = 3.15% p.a. and a face value of $100. This corporate bond matures at par. Its maturity date is 1 January, 2025. The yield rate is assumed to be j₂ = 4.7% p.a. Assume that this corporate bond has a 9% chance of default in any six-month period during its term. Assume, also, that, if default occurs, Georg will receive no further payments at all. Calculate Georg's purchase price. Round your answer…
Jesscia bailey currently has $6,300 in her 401K retirement account. She will contribute $200 a month into the account, earning 7.4% annual return, compounded monthly. If she does this for 32 years what is the value of the investment account in today's. Make sure to Assume that the average rate of inflation is 1.1%.
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?.
Mike buys an annuity-immediate with varying annual payments for 30 years. During the first 5 years, the payment is constant and equal to 800. Beginning in year 6, the payments start to increase. For year 6 and all future years, the current year's payment is 50 larger than the previous year's payment. At an annual effective interest rate of 6%, find the present value of the annuity.
Your company’s pension plan earns 4.3 % interest per year, compounded quarterly. a) You would like to receive payments of $40,000 quarterly while retired. If you would like these payments paid out over 25 years, what amount of money will you need in your pension fund at the beginning of your retirement years? Give the answer correctly to 2 decimal places, and do not use the $ sign in the answer box. The money you will need at the beginning of your retirement years is Blank 1. Calculate the answer by read surrounding text. dollars. b) Use your answer from part a to help you to determine how much you should put into your pension fund quarterly during your working years to reach your retirement goals. Assume you are planning to work for 30 years. Give the answer correctly to 2 decimal places, and do not use the $ sign in the answer box. The amount you should deposit quarterly during your working years is Blank 2. Calculate the answer by read surrounding text.…
Professor’s Annuity Corp. offers a lifetime annuity to retiring professors. For a payment of $350,000 at age 65, the firm will pay the retiring professor $2,800 a month until death. If the professor’s remaining life expectancy is 30 years, what is the monthly rate on this annuity? What is the effective annual rate?
Peter intends to retire in 5 years. To supplement his pension he would like to receive $150 every months for 20 years. If he is to receive the first payment a month after his retirement and interest is 4.2% p.a. compounded monthly, how much must he invest today to achieve his goal?
You are expected to retire in 35 years from today. If you make an annual deposit of $20,500 at the end of each year into an investment account that pays 6.88% annually, how much money will your retirement account have at the end of 35 years if the interest in compounded.
A relative wills you an annuity paying $ 1900 per quarter for the next 6 years. If money is worth 10% compounded quarterly, what is the present value of this annuity? Round your answer to two digits!

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