Gold Insurance Company intends to offer a contract with a guaranteed annuity in units of $500, payable at the end of each year for 25 years. The company has a strong investment record and can consistently earn 7 percent on its net investments after taxes. If the company intends to earn 1 percent on this contract, compute the estimated price that Gold Insurance should set at a 6 percent discount rate. Assume that it is an ordinary annuity, and the price will be equivalent to the present value.

Q: A life insurance company will sell a 20 year annuity paying $1,600 at the end of each month for…

A: Solution:-When an equal amount is paid each period at end of period, it is known as ordinary…

Q: Suppose an agent has $100,000 today that he wants to save for 10 years. Compare the following two…

A: Working #1 Computation of Total value after 10 years  of Bank A Bank A           All figures in…

Q: You need $24,056 at the end of 6 years, and your only investment outlet is an 8 percent long-term…

A: An estimate of the present value of hypothetical future cash flows for a given time period at an…

Q: Present value. County Ranch Insurance Company wants to offer a guaranteed annuity in units of $400,…

A: Present Value of annuity refers to the current value of a series of equal cash flows or payments at…

Q: also good for 13 years. How much money would you need to invest in Investment B today for it to be…

A: Information Provided: Monthly payment (Investment A) = $1650 APR (Investment A) = 7,8% compounded…

Q: A local bank advertises the following deal: "Pay us $100 at the end of each year for 12 years and…

A: A deferred perpetuity involves a stream of regular payments that starts at a certain point in the…

Q: Imagine you borrow $600 from your roommate, agreeing to pay her back $600 plus 7 percent nominal…

A: Fisher Equation defines the relationship between the real rate of interest and the nominal rate of…

Q: a 20-year a

A: Years of amortization = 20 in months =20*12= 240 The per month discount rate = 4.25% /12=0.3542%=…

Q: Midwest Bank is offering a 25-year mortgage with an APR of 6% based on monthly compounding. With…

A: A mortgage may be a sort of credit utilized to buy genuine bequest, ordinarily a domestic. It…

Q: Using the Simple Inteest equation, determine the lowest interest amount and the lowest monthly…

A: Offer A  Interest Rate = 7% Monthly Interest rate(rA) = 7%/12 =0.5833% Years  = 5 Terms(nA) = 5*12 =…

Q: You are looking at two investment options, A and B. Investment A is a 13-year annuity that needs an…

A: Compounding refers to the ability of an investment to generate earnings, which are then reinvested…

Q: My pension plan will pay me $11,500 once a year for a 10-year period. The first payment will come in…

A: Here,Annual amount received from pension plan is $11,500time period is 10 yearfirst payment starts…

Q: A store offers two payment plans. Under the installment plan, you pay 25% down and 25% of the…

A: a-1Present value = Cash flow/(1+interest)^number of years that is present value=

Q: The Mrtinezes are planning to refinanace their home (assuming that there are no additional finance…

A: EMI refers to Equal monthly installments which means the repayment of the total loan by the borrower…

Q: You have your choice of two investment accounts. Investment A is a 9-year annuity that features…

A: The time value of money technique explains the concept that the rupee received today is worth more…

Q: My pension plan will pay me $11,500 once a year for a 10-year period. The first payment will come in…

A: Here,AnnualAmount received from pension plan is $11,500Time Period is 10 yearFirst payment starts…

Q: B) What price will a finance company pay to a merchant for a conditional sale contract that requires…

A: PartA)1.  Northwest Mutual Annuity: On a $100,000 purchase, the monthly payment is $875 after a…

Q: Required: a. What is the duration of its obligation to me? The current interest rate is 10% per…

A: Bond valuation seeks to ascertain a bond's intrinsic worth. It entails determining the present value…

Q: Do not provide solution in imge format. and also do not provide plagarised content otherwise i…

A: The objective of the question is to calculate the future value of an annuity where monthly payments…

Q: Two annuities are available for purchase that your client has identified. The first annuity pays…

A: It is a case of comparison of an annuity of payments. The decision is based on the net present value…

Q: An insurer needs to make the following annuity payments to an individual: £744 paid at the beginning…

A: Present value is a financial concept that refers to the value of a future cash flow or stream of…

Q: You are looking at two investment options, A and B. Investment A is a 15-year annuity that needs an…

A: Here, To Find: Part A. Future value of Investment A and the present value of investment B =? Part…

Q: Which of the following statements is most correct? The first payment under a 3-year, annual payment,…

A: The time value of money is the concept that a sum of money is worth more right now than it will be…

Q: Teal and Associates needs to borrow $35,000. The best loan they can find is one at 12% that must be…

A: Monthly payment for the loan comprise of an interest part and principal repayment part and is…

Q: Please use the lump sum approach to calculate the present value of an ordinary three-year annuity,…

A: “Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only…

Q: An insurer needs to make the following annuity payments to an individual: £744 paid at the…

A: Present value is a financial concept that refers to the value of a future cash flow or stream of…

Q: You have your choice of two investment accounts. Investment A is a 7-year annuity that features…

A: The time value of money technique explains the concept that the rupee received today is worth more…

Q: Lidia deposits $800 at the END of each year for 8 years in a savings account. The account pays 12%…

A: Future value is the value of an asset in the future over the years. It can be calculated as…

Q: enheimer Bank is offering a 30​-year mortgage with an APR of 4.88% based on monthly compounding.…

A: Loans are paid by equal periodic payments and these periodic payments carry the payment for interest…

Q: Teal and Associates needs to borrow $55,000. The best loan they can find is one at 13% that must be…

A: Given: Borrowing = $55,000 Interest rate = 13% Years = 5(1/2) = 5.5 years

Q: You have purchased a guaranteed investment contract (GIC) from an insurance firm that promises to…

A: Initial value (PV) = $20,000 Interest rate (r) = 0.05 Period (n) = 6 Years To Find: Amount we get in…

Q: Assume you plan to borrow $400,000 from your bank to buy a home. The bank offers: a 5-year fixed…

A: A five-year fixed-rate loan is a type of financial agreement where the interest rate is fixed for…

Q: For life insurance policies, some of the premium pays for the cost of the insurance, and the…

A: The annual percentage yield (APY) is the real rate of return earned on an investment, taking into…

Amortized Loans

The term "amortization" refers to spreading the value of a loan or a debt over a series of regular payments or installments comprising of both the principal and interest amount. It generally involves the process where in the value of a loan or an intangible asset is written down over its maturity period.