Mike buys an annuity-immediate with varying annual payments for 30 years. During the first 5 years, the payment is constant and equal to 800. Beginning in year 6, the payments start to increase. For year 6 and all future years, the current year's payment is 50 larger than the previous year's payment. At an annual effective interest rate of 6%, find the present value of the annuity.

Mike buys an annuity-immediate with varying annual payments for 30 years. During the first 5 years, the payment is constant and equal to 800. Beginning in year 6, the payments start to increase. For year 6 and all future years, the current year's payment is 50 larger than the previous year's payment. At an annual effective interest rate of 6%, find the present value of the annuity.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Li Jun purchased an annuity that had an interest rate of 3.75% compounded semi- annually. It provided her with payments of $2,000 at the end of every month for 3 years. If the first withdrawal is to be made in 4 years and 1 month, how much did she pay for it? $0.00 Round to the nearest cent
Determine the kind of annuity used in the following situations. Then, solve the problem. Show your neat and complete solution. 1. Your dad deposits P 10,000 every 3 months for 7 years in an account paying 4% compounded quarterly.How much will she have in his account at the end of 7 years assuming no withdrawals were made?
please show the step by step solution. Do not skips steps. Explain your steps Please write on paper
A thirty-year annuity has end-of-month payments. The first year the payments are each $120. In subsequent years each payment increases by $15 over what it was the previous year. Find the present value of the annuity if i - 4%. (Round your answer to the nearest cent.) A continuously paying level annuity pays $20 each year for fifteen years. The force of interest is (4 + t)1, Find the present value of this annuity. (Round your answer to the nearest cent.) $31.16 Submit Answer An amortized loan is repaid with annual payments which start at $300 at the end of the first year and increase by $35 each year until a payment of $1,140 is made, after which they cease. If interest is 3% effective, find the amount of principal in the fourteenth payment. (Round your answer to the nearest cent.) $ 755.00
Laurie bought a 5-year level annuity with payments made at the end of each year. The annuity has an annual yield rate of 7.0% and a modified convexity of 11.4080. Calculate the Macaulay convexity of the annuity. A 9.9 B 10.2 D 11.7 12.2 E 13.1
Don purchases a 20-year annuity-immediate evaluated at an annual effective rate of 5.5%. The first payment will be made at the end of year six in the amount of 2,000. The subsequent payments increase by 100 each year. Calculate the present value of the annuity at purchasing.
Matthew will receive a series of payments at the beginning of each year for 20 years. The first payment is 100. The subsequent 9 payments increase by 5% from the previous payment. After the 10th payment, each payment decreases by 5% from the previous payment. The annual effective interest rate is 7%. Calculate the present value of these payments at the time the first payment is made.
Suppose you purchased an annuity that pays $200 at the beginning of each year for 3 years. The interest rate is 4.4%. What is the present value of the annuity?
Robert wants to have $2,300 at the end of every three months for 8 years. The bank pays 8% interest, compounded quarterly. Robert calculates that the present value of the ordinary annuity is $53,977.16. What would be the present value if payments were to be received at the beginning of every period rather than the end?
Mr. Thompson wants to receive a fixed monthly payment of $800 for 10 years from an ordinary simple annuity. If the annuity offers an annual interest rate of 5%, compounded monthly, calculate the present value of the annuity.
blake purchased an annuity that had an interest rate of 2.50% compounded semi- annually. it provided her with payments of $2500 at the end of every month for 6 years. if the first withdrawal is to be made in 5 years and 1 month, how much did she pay for it?
Alexander buys annuity with lifetime payments per term. The payment amount of this annuity, whose payments are 1,000 TL for the first 5 years, then increases to 2,000 TL. If the annual effective interest rate is 8%, what is the present value of the annuity? Thanks.