Live Forever Insurance Company is selling a perpetual annuity contract that pays $2,700 monthly. The contract currently sells for$329,000.a. What is the monthly return on this investment vehicle?Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.b. What is the APR?Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.c. What is the effective annual return?Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.a. Monthly returnb. Annual percentage ratec. Effective annual return%%%

An annuity is a financial product where you make regular payments, and in return, you receive a…

Answered: Live Forever Insurance Company is…

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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> An ordinary annuity that earns 7.3% compounded monthly has a current balance of $600,000. The owner of the account is about to retire and has to decide how much to withdraw from the account each month. Find the number of withdrawals under each of the following options. (A) $5000 monthly (B) $4000 monthly (C) $3000 monthly (A) Select the correct choice below, and, if necessary, fill in the answer box t OA. The total number of withdrawals of $5000 will be OB. The withdrawals of $5000 continue forever. Help me solve this View an example complete your choice. Get more help. Clear all Check answer rect: 0
Suppose your Visa credit card charges an APR of 13.5%, compounded monthly and your current statement shows a balance of $758.50.a) If you make no payments and no additional purchases for one year, what will bethe amount owed at the end of that year?b) How much total interest will be paid?c) What is the nominal rate?d) What is the effective annual rate (EAR)?e) Suppose this credit card company requires a minimum monthly payment of $25.Assuming that no additional purchases are made and also assuming that this minimum amount is paid every month, prepare an amortization schedule for the first three months of payments.
1. Find the amount of an ordinary annuity consisting of 24 monthly payments of $150 that earn interest at 10% per year compounded monthly. Round to the nearest cent. b. Find the present value of an ordinary annuity consisting of 18 monthly payments of $150each and earning interest at 5% per year compounded monthly. Round to the nearest cent. c. True or False: The Annuities we deal with in this section are: Certain, Ordinary, and complex.
For life insurance policies, some of the premium pays for the cost of the insurance, and the remainder goes toward the cash value of the policy and earns interest like a savings account. Consider the following insurance company options. Company 1: pays 4.2% compounded monthly on the cash value of their policies Company 2: pays 4.21% compounded semiannually on the cash value of their policies What is the APY offered by each company? (Round your answers to the nearest hundredth.) Company 1 % Company 2 %
An ordinary annuity that earns 7.3% compounded monthly has a current balance of $600,000. The owner of the account is about to retire and has to decide how much to withdraw from the account each month. Find the number of withdrawals under each of the following options. (A) $5000 monthly (B) $4000 monthly (C) $3000 monthly C... (A) Select the correct choice below, and, if necessary, fill in the answer box to complete your choice. OA. The total number of withdrawals of $5000 will be OB. The withdrawals of $5000 continue forever. ti, 14e Incorr
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Live Forever Life Insurance Company is selling a perpetuity contract that pays $1,500 monthly. The contract currently sells for $260,000. a. What is the monthly return on this investment vehicle? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the APR? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. What is the effective annual return? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Monthly return b. APR c. EAR
Complete the following for the present value of an ordinary annuity. (Use Table 13.2.) Note: Do not round intermediate calculations. Round your answer to the nearest cent. Amount of annuity expected $ 750 Payment Annually Time 4 years Interest rate 6 % Present value (amount needed now to invest to receive annuity)
You get a new credit card from your bank. The document that comes with the card informs you that the interest rate on that card is 24% APR with monthly compounding. What is the effective annual rate you'll actually be paying? Enter your answer as a percentage, rounded to 2 decimals, and without the percentage sign ('%'). For example, if your answer is 0.23456, then enter 23.46
What is the future value of a 5-year ordinary annuity with annual payments of $ 702, evaluated at a 13.84 percent interest rate? Enter your answer to the nearest $.01. Do not use $ or, signs in your answer. Enter your answer as a positive number. Your Answer:
Suppose a life insurance company sells a $250,000 one-year term life insurance policy to a 24-year-old female for $360. The probability that the female survives the year is 0.999477. Compute and interpret the expected value of this policy to the insurance company. The expected value is $ (Round to two decimal places as needed.) Which of the following interpretation of the expected value is correct? O A. The insurance company expects to make an average profit of $32.71 on every 24-year-old female it insures for 1 month. O B. The insurance company expects to make an average profit of $359.81 on every 24-year-old female it insures for 1 year. O C. The insurance company expects to make an average profit of $20.84 on every 24-year-old female it insures for 1 month. O D. The insurance company expects to make an average profit of $229.25 on every 24-year-old female it insures for 1 year.

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