20 minutes ASAP Interest rate for an annuity Personal Finance Problem Anna Waldheim was seriously injured in an industrialaccident. She sued the responsible parties and was awarded a judgment of $3,000,000. Today, she and herattorney are attending a settlement conference with the defendants. The defendants have made an initial offer of$240,728 per year for 20 years. Anna plans to counteroffer at $352,379 per year for 20 years. Both the offer and mcounteroffer have a present value of $3,000,000, the amount of the judgment. Both assume payments at the end oeach year.a. What interest rate assumption have the defendants used in their offer (rounded to the nearest whole percent)?b. What interest rate assumption have Anna and her lawyer used in their counteroffer (rounded to the nearestwhole percent?c. Anna is willing to settle for an annuity that carries an interest rate assumption of 7%. What annual payment wouldbe acceptable to her?a. The interest rate assumption the defendants used in their offer, r, is %. (Round to the nearest whole percent.)b. The interest rate assumption Anna and her lawyer used in their counteroffer iswhole percent)%. (Round to the neareste. If Anna is willing to settle for an annuity that carries an interest rate assumption of 7%, she would be willing toaccept an annual payment of $ (Round to the nearest dollar)

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Answered: interest rate for an annuity Personal…

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter9: Acquisitions Of Property

Section: Chapter Questions

Problem 34P

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Emma plans to loan $1,000 to her friend, who will pay a simple interest rate of 5.8% every year for the loan. If no payments are made and no further borrowing occurs between them for 13 years, then how much money will Emma' s friend owe her? $1,061.36 $1,754.00 $2,081.20 $158.00 Now, assume that Emma's friend volunteers to pay compound interest instead of simple interest for her loan. If interest is accrued at 5.8% compounded annually, all other things being equal, how much money will Emma's friend owe her in 13 years? $2,081.20 $1,058.00 $120.71 $ 1,754.00 Emma has another investment option in the market that pays 5.8% nominal interest, but it's compounded quarterly. Keeping everything else constant, how much money will Emma have in 13 years if she invests $1,000 in this fund? $158.00 $129.72 $2,114.01 $1,059.27
Imagine you are helping a client, Jill Pole, prepare for retirement Jill would like to withdraw $14,411 from her retirement fund exactly one month after she quits her job. Jill would like all subsequent monthly withdrawals to grow at an effective annual rate of 2.5%. Further, Jill would like to have her funds invested to earn an effective annual return of 7.7%. Jill expects to live for 26 years once she retires and does not plan to leave an inheritance. How much does Jill need to have in her retirement account on the day she retires in order to fund this stream of growing monthly distributions from her retirement account?.
Discount loan (interest and principal at maturity). Chuck Ponzi has talked an elderly woman into loaning him $20,000 for a new business venture. She has, however, successfully passed a finance class and requires Chuck to sign a binding contract on repayment of the $20,000 with an annual interest rate of 9% over the next 20 years. Determine the cash flow to the woman under a discount loan, in which Ponzi will have a lump-sum payment at the end of the contract. What is the amount of payment that the woman will receive at the end of years 1 through 19? (Round to the nearest cent.) $
Discount loan (interest and principal at maturity). Chuck Ponzi has talked an elderly woman into loaning him $20,000 for a new business venture. She has, however, successfully passed a finance class and requires Chuck to sign a binding contract on repayment of the $20,000 with an annual interest rate of 9% over the next 20 years. Determine the cash flow to the woman under a discount loan, in which Ponzi will have a lump-sum payment at the end of the contract. What is the amount of payment that the woman will receive at the end of years 1 through 19? $ 0.00 (Round to the nearest cent.) What is the amount of payment that the woman will receive at the end of the loan in year 20? (Round to the nearest cent.)
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An author just signed a lucrative contract with a publisher that offers to pay her the amount of $500 at the end of year 8 when the book is scheduled to be released. The author, being profligate, desires to receive a different package: an immediate payment of $100 that is followed by an annuity (an equal amount) to be paid at the end of each year for 8 consecutive years. What annuity will make his package equivalent to the publisher's advance. Use an interest rate is 5.00%. $ Place your answer in dollars and cents. Do not use a dollar sign. Work answers out to at least 4 decimal points of accuracy.
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Fully amortized loan (annual payments for principal and interest with the same amount each year). Chuck Ponzi has talked an elderly woman into loaning him $45,000 for a new business venture. She has, however, successfully passed a finance class and requires Chuck to sign a binding contract on repayment of the $45,000 with an annual interest rate of 7% over the next 20 years. Determine the cash flow to the woman under a fully amortized loan, in which Ponzi will make equal annual payments at the end of each year so that the final payment will completely retire the original $45,000 loan. What is the amount of payment that the woman will receive at the end of years 1 through 20? (Round to the nearest cent.)
TIME VALUE OF MONEY In purchasing a house, Homer agrees to pay $10,000 cash and $5,000 at the end of each 6 months for 10 years to discharge completely all requirements for principal and Interest at the rate 6% compounded semiannually. a. Find the present value of the debt on the day of purchase before any payment is made. b. Just after Homer pays his 8th $5,000 installment, what is his remaining liability? Solve the following problems by showing your formula and computation
After an accident Nomfundo was awarded an amount from the Road Accident Fund as compensation for her injuries. She chose to receive R18 900 per month indefinitely. If money is worth 9,95% per year, compounded monthly, then the amount awarded is approximately [1] R7 252 333. [2] R6 565 554. [3] R2 279 397. [4] R189 950. [5] none of the above
Discount loan (interest and principal at maturity). Chuck Ponzi has talked an elderly woman into loaning him $45,000 for a new business venture. She has, however, successfully passed a finance class and requires Chuck to sign a binding contract on repayment of the $45,000 with an annual interest rate of 11% over the next 5 years. Determine the cash flow to the woman under a discount loan, in which Ponzi will have a lump-sum payment at the end of the contract. What is the amount of payment that the woman will receive at the end of years 1 through 4? $nothing (Round to the nearest cent.)

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