Determine the tax-free amount of the monthly payment in each of the following instances. Use the life expectancy tables. Use Table Table III and Table V. Required: a. Person A is age 59 and purchased an annuity for $84,000. The annuity pays $800 per month for life. Note: Round exclusion percentage computation to one decimal place. b. Person B is 68 and purchased an annuity for $82,000. The annuity pays $1,050 per month for life. Note: Round exclusion percentage computation to one decimal place. Round your final answer to 2 decimal places. c. Person C is 61 and purchased an annuity for $42,000 that pays a monthly payment of $650 for 10 years. Note: Round exclusion percentage computation to one decimal place. Round your final answer to 2 decimal places. a. Tax free portion of payments b. Tax free portion of payments c. Tax free portion of payments Amount

Determine the tax-free amount of the monthly payment in each of the following instances. Use the life expectancy tables. Use Table Table III and Table V. Required: a. Person A is age 59 and purchased an annuity for $84,000. The annuity pays $800 per month for life. Note: Round exclusion percentage computation to one decimal place. b. Person B is 68 and purchased an annuity for $82,000. The annuity pays $1,050 per month for life. Note: Round exclusion percentage computation to one decimal place. Round your final answer to 2 decimal places. c. Person C is 61 and purchased an annuity for $42,000 that pays a monthly payment of $650 for 10 years. Note: Round exclusion percentage computation to one decimal place. Round your final answer to 2 decimal places. a. Tax free portion of payments b. Tax free portion of payments c. Tax free portion of payments Amount

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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The difference between a Roth IRA and a traditional IRA is that in a Roth IRA taxes are paid on the income that is contributed, but the withdrawals at retirement are tax-free. In a traditional IRA, however, the contributions reduce your taxable income, but the withdrawals at retirement are taxable. Assume you plan to devote $5,000 to retirement savings in each year. You will retire in 30 years and expect to live for an additional 20 years after retirement. a. Assume the before-tax interest rate is 5%. What will be your after-tax 20-year retirement consumption stream if you choose to save in a traditional IRA? Assume your tax rate is fixed at 30%. (Round your answers to 2 decimal place.) > Answer is complete but not entirely correct. 20-year consumption stream (assuming monthly payouts) $ 27,462.69
Javier is currently paying $1 comma 5001,500 in interest on his credit cards annually. If, instead of paying interest, he saved this amount every year, how much would he accumulate in a tax-deferred account earning 1111 percent over 99, 1414, or 1919 years? Note: Round intermediate computations to at least five (5) decimal places. Click on the table icon to view the FVIFA table: LOADING...
Assume that a pension plan offers to pay $500,000 on a person's retirement (his/her sixty-fifth birthday) or a semi-annual annuity for the remainder of the person's life – i.e., starting 6 months from the date of retirement and including his/her date of death. Interest rates are 7 percent compounded annually, and a person's life expectancy has been determined statistically as being 78.5 years. Calculate the amounț of the annuity that would make a person indifferent between the options?l .Ysm
To help out with her retirement savings, Linda invests in an ordinary annuity that earns 6.6% interest, compounded annually. Payments will be made at the end of each year. Continue How much money does she need to pay into the annuity each year for the annuity to have a total value of $97,000 after 17 years? Do not round intermediate computations, and round your final answer to the nearest cent. If necessary, refer to the list of financial formulas. 50°F Mostly cloudy Es O 2 2 W 0 3 E 4 X R O S F6 % 5 € T Y F8 & 7 a 7 U 27 D * 00 Submit Assignmen 2022 McGraw Hill LLC. All Rights Reserved. Terms of Use | Privacy Center | Accessibility F10 D X I 9 2 F11 PDF F12 NumLk Prt Sc ^ Pause Br +
The annual insurance premium on Maria's home is $1,958 and the annual property tax is $1,432. If her monthly principal and interest payment is $1,613, find the adjusted monthly payment including principal, interest, taxes, and insurance (PITI). PITI= $ (Round to the nearest cent as needed.)
Juanita paid a life insurer $60,100 in exchange for an immediate life annuity. Juanita will receive $600 per month from the insurer, and her life expectancy is 14 years. Assume that Juanita receives 12 monthly payments in the first year. How much taxable income must she report? (Round your answer to 2 decimal places)
You have just made your first $4,500 contribution to your individual retirement account. Assume you earn an annual return of 10.85 percent and make no additional contributions. a. What will your account be worth when you retire in 43 years? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. b. What if you wait 10 years before contributing? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. a. Account value if you start now b. Account value if you wait 10 years
An investor wants to save money to purchase real estate. He deposits $550 at the end of each year in an ordinary annuity that pays 4% interest, compounded annually. Answer each part. Do not round any intermediate computations nor answers. If necessary, refer to the list of financial formulas. (a) Find the total value of the annuity at the end of the 1 year. st 24 (b) Find the total value of the annuity at the end of the 2 nd year. (c) Find the total value of the annuity at the end of the 3 rd year.
You have just made your first $5686 contribution to your retirement account. Assume you earn a return of 11.5 percent per year and make no additional contributions. What will your account be worth when you retire in 45 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Find the future value of each annuity due. Then determine how much of this value is from contributions and how much is from interest. Payments of $220 were made at the beginning of each quarter for 15 years at 4.6% compounded quarterly. The future value of the annuity due is $19077.23. The amount from contributions is $_______ The amount from interest is $ ________ do not round until the final answer.
The annual insurance premium on Maria's home is $1,986 and the annual property tax is $1,407. If her monthly principal and interest payment is $1,623, find the adjusted monthly payment including principal, interest, taxes, and insurance (PITI). PITI = S (Round to the nearest cent as needed.)
A woman borrows $3000 at %9 compounded monthly, which is to be amortized over 3 years in equal monthly payments. For tax purposes, she needs to know the amount of interest paid during each year of the loan. Find the interest paid during the first year, the second year, and the third year of the loan. (Hint: Find the unpaid balance after 12 payments and after 24 payments. Also see example in your notes.)

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