c. If she expects to earn a 9 percent annual return on her investments, which option should b. If she expects to earn an 8 percent annual return on her investments, which option should a. If she expects to earn a 7 percent annual return on her investments, which option should to receive a lump sum payment today of $61 million, 10 annual end-of-year payments of $9.5 Crissie has just won the state lottery and has three award options from. She can elect 6-30 Evaluating lump sum amounts and annuities million, or 30 annual end-of-year payments of $5.5 million. she choose? she choose? she choose?
c. If she expects to earn a 9 percent annual return on her investments, which option should b. If she expects to earn an 8 percent annual return on her investments, which option should a. If she expects to earn a 7 percent annual return on her investments, which option should to receive a lump sum payment today of $61 million, 10 annual end-of-year payments of $9.5 Crissie has just won the state lottery and has three award options from. She can elect 6-30 Evaluating lump sum amounts and annuities million, or 30 annual end-of-year payments of $5.5 million. she choose? she choose? she choose?
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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Transcribed Image Text:c. If she expects to earn a 9 percent annual return on her investments, which option should
b. If she expects to earn an 8 percent annual return on her investments, which option should
a. If she expects to earn a 7 percent annual return on her investments, which option should
to receive a lump sum payment today of $61 million, 10 annual end-of-year payments of $9.5
Crissie has just won the state lottery and has three award options to choose from. She can elect
6-30
Evaluating lumnp sum
amounts and annuities
million, or 30 annual end-of-year payments of $5.5 million.
she choose?
she choose?
she choose?
Transcribed Image Text:Assume that your father is now 50 years old, that he plans to retire in 10 years, and that he ex-
pects to live for 25 years after he retires, that is, until he is 85. He wants a fixed retirement in-
come that has the same purchasing power at the time he retires as $40,000 has today (he real-
izes that the real value of his retirement income will decline year by year after he retires). His
retirement income will begin the day he retires, 10 years from today, and he will then get 24 ad-
ditional annual payments. Inflation is expected to be 5 percent per year from today forward; he
currently has $100,000 saved up; and he expects to earn a return on his savings of 8 percent per
year, annual compounding. To the nearest dollar, how much must he save during each of the
years (with deposits being made at the end of each year) to meet his retirement goal?
6-22
Required annuity payments
next 10
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