Joe can purchase one of two annuities: Annuity 1: A 10-year decreasing annuity immediate, with annual payments of 10, 9,8... 1. Annuity 2: A perpetuity-immediate with annual payments. The perpetuity pays 1 in year 1, 2 in year 2, 3 in year 3., and 11 in year 11. After year 11, the payments remain constant at 11. At an annual effective interest rate of i, the present value of Annuity 2 is twice the present value of Annuity 1. Calculate the value of Annuity 1. A 36.4 374 30.4

Joe can purchase one of two annuities: Annuity 1: A 10-year decreasing annuity immediate, with annual payments of 10, 9,8... 1. Annuity 2: A perpetuity-immediate with annual payments. The perpetuity pays 1 in year 1, 2 in year 2, 3 in year 3., and 11 in year 11. After year 11, the payments remain constant at 11. At an annual effective interest rate of i, the present value of Annuity 2 is twice the present value of Annuity 1. Calculate the value of Annuity 1. A 36.4 374 30.4

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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If you have a 13-year annuity paying $209 quarterly beginning in 6 years when interest is 3.13% compounded semi-annually, what is the number of missed payments? Treat the deferred annuity as an annuity due with the first payment at the 6-year mark.
Assume that an annuity has an annual cash flow of $375 in Years 11 through 20 (10 cash flows). Also assume that the nominal annual interest rate that is appropriate for this annuity is 9 percent (compounded daily, and using a 365-day basis year). Given this information, determine the value o this annuity at Year 0. $ 838.62 $1,205.43 $960.89 $1,083.16 O $716.35
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In the following ordinary annuity, the interest is compounded with each payment, and the payment is made at the end of the compounding period. You and your new spouse each bring home $1600 each month after taxes and other payroll deductions. By living frugally, you intend to live on just one paycheck and save the other in a mutual fund yielding 7.74% compounded monthly. How long will it take to have enough for a 20% down payment on a $175,000 condo in the city? (Round your answer to two decimal places.)
Two annuities are available for purchase that your client has identified. The first annuity pays $7,000 each six-month period over a 5-years period, at a nominal rate of 9% p.a. The annuity has an annual fee of $300, paid at the beginning of each year. The second annuity pays $1,000 each month, again over 5 years at a nominal rate of 10% p.a. and does not have an annual fee. If each of the annuities cost $50,000, identify which of the annuities you would recommend to your client.
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Two annuity immediates in perpetuity have a present value of $5,000 and a common effective annual interest rate. The first annuity makes payments of X at the end of every 4 years while the second makes payment of $50 at the end of every two months. Find X.
A 6-year term insurance policy has an annual premium of $500, and at the end of 6 years, all payments and interest are refunded. What lump-sum deposit is necessary to equal this amount if you assume an interest rate of 2.5% compounded annually? (a) State the type. future value present value of an annuity sinking fund amortization ordinary annuity (b) Answer the question. (Round your answer to the nearest cent.) $
Lidia deposits $800 at the END of each year for 8 years in a savings account. The account pays 12% interest, compounded annually. Lidia calculates that the future value of the ordinary annuity is $9839.75. What would be the future value if deposits are made at the BEGINNING of each period rather than the END? the options are: a. 8071.21 b. 9839.75 c. 11020.53 d. 11820.53
9. Petty cash fund is a. Separately classified as current asset b. Money kept on hand for making minor disbursements of coin and currency rather than by writing checks c. Set aside for the payment of payroll d. Restricted cash
A perpetuity-due with annual payments consists often level payments of X followed by a series of increasing payments. Beginning with the eleventh payment, each payment is 1.5% larger than the preceding payment. Using an annual effective interest rate of 5%, the present value of the perpetuity is 45,000. Calculate X. B C 1,679 E 1,696 1,737 D 1,763 1,781
Find the periodic withdrawals PMT for the given annuity account. (Assume end-of-period withdrawals and compounding at the same intervals as withdrawals. Round your answer to the nearest cent.) $300,000 at 6%, paid out monthly for 11 years

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