Baghiben Problem 5-60 Future Value and Multiple Cash Flows [LO 1]An insurance company is offering a new policy to its customers. Typically, the policy isbought by a parent or grandparent for a child at the child's birth. The details of the policyare as follows: The purchaser (say, the parent) makes the following six payments to theinsurance company:First birthday:$ 900Second birthday: $ 900Third birthday:$ 1,000Fourth birthday:Fifth birthday:Sixth birthday:$1,000$ 1,100$ 1,100After the child's sixth birthday, no more payments are made. When the child reaches age65, he or she receives $231,000.If the relevant interest rate is 9 percent for the first six years and 6 percent for allsubsequent years, what is the value of the policy at the child's 65th birthday? (Do notround intermediate calculations and round your answer to 2 decimal places, e.g.,32.16.)Child's 65th birthday$235,183.91

Future value refers to the value of the current asset at some future date affected by interest and…

Problem 5-60 Future Value and Multiple Cash Flows [LO 1] An insurance company is offering a new policy to its customers. Typically, the policy is bought by a parent or grandparent for a child at the child's birth. The details of the policy are as follows: The purchaser (say, the parent) makes the following six payments to the insurance company: First birthday: Second birthday: Third birthday: Fourth birthday: Fifth birthday: Sixth birthday: $ 900 $ 900 $1,000 $1,000 $1,100 $ 1,100 After the child's sixth birthday, no more payments are made. When the child reaches age 65, he or she receives $231,000. If the relevant interest rate is 9 percent for the first six years and 6 percent for all subsequent years, what is the value of the policy at the child's 65th birthday? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Child's 65th birthday $ 235,183.91

Problem 5-60 Future Value and Multiple Cash Flows [LO 1] An insurance company is offering a new policy to its customers. Typically, the policy is bought by a parent or grandparent for a child at the child's birth. The details of the policy are as follows: The purchaser (say, the parent) makes the following six payments to the insurance company: First birthday: Second birthday: Third birthday: Fourth birthday: Fifth birthday: Sixth birthday: $ 900 $ 900 $1,000 $1,000 $1,100 $ 1,100 After the child's sixth birthday, no more payments are made. When the child reaches age 65, he or she receives $231,000. If the relevant interest rate is 9 percent for the first six years and 6 percent for all subsequent years, what is the value of the policy at the child's 65th birthday? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Child's 65th birthday $ 235,183.91

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter4: Gross Income

Section: Chapter Questions

Problem 2RP

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Problem 5-60 Future Value and Multiple Cash Flows [LO 1] An insurance company is offering a new policy to its customers. Typically, the policy is bought by a parent or grandparent for a child at the child's birth. The details of the policy are as follows: The purchaser (say, the parent) makes the following six payments to the insurance company: First birthday: Second birthday: Third birthday: Fourth birthday: Fifth birthday: Sixth birthday: After the child's sixth birthday, no more payments are made. When the child reaches age 65, he or she receives $220,000. If the relevant interest rate is 10 percent for the first six years and 6 percent for all subsequent years, what is the value of the policy at the child's 65th birthday? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Child's 65th birthday $ 850 $ 850 $950 $950 $1,050 $ 1,050
Problem 5-60 Future Value and Multiple Cash Flows [LO 1] An insurance company is offering a new policy to its customers. Typically, the policy is bought by a parent or grandparent for a child at the child’s birth. The details of the policy are as follows: The purchaser (say, the parent) makes the following six payments to the insurance company: First birthday: $ 900 Second birthday: $ 900 Third birthday: $ 1,000 Fourth birthday: $ 1,000 Fifth birthday: $ 1,100 Sixth birthday: $ 1,100 After the child’s sixth birthday, no more payments are made. When the child reaches age 65, he or she receives $231,000. If the relevant interest rate is 9 percent for the first six years and 6 percent for all subsequent years, what is the value of the policy at the child's 65th birthday? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
es Problem 5-60 Future Value and Multiple Cash Flows [LO 1] An insurance company is offering a new policy to its customers. Typically, the policy is bought by a parent or grandparent for child at the child's birth. The details of the policy are as follows: The purchaser (say, the parent) makes the following six payments to the insurance company: Check my wor First birthday: Second birthday: Third birthday: Fourth birthday: Fifth birthday: Sixth birthday: After the child's sixth birthday, no more payments are made. When the child reaches age 65, he or she receives $360,000. If the relevant interest rate is 12 percent for the first six years and 7 percent for all subsequent years, what is the value of the policy at the child's 65th birthday Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Child's 65th birthday $ 760 $ 760 $ 860 $ 860 $ 960 $ 960
3 An insurance company is offering a new policy to its customers. Typically, the policy is bought by a parent or grandparent for a child at the child's birth. The details of the policy are as follows: The purchaser (say, the parent) makes the following six payments to the insurance company: eBook First birthday: Second birthday: Third birthday: $ 860 $ 860 $ 960 $ 960 Fourth birthday: Fifth birthday: Sixth birthday: After the child's sixth birthday, no more payments are made. When the child reaches age 65, he or she receives $120,000. If the relevant interest rate is 9 percent for the first six years and 5 percent for all subsequent years, what is the value of the policy at the child's 65th birthday? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Child's 65th birthday $ 1,060 $ 1,060
QUESTION 5 Katharine Bartle will receive an annuity of $4,090.00 every month for 23 years. How much is this cash flow worth to them today if the payments begin today? Assume a discount rate of 5.00%. Oa. $55,398.13 b. $2,119,880.47 c. $672,837.73 Od. $170,156.69
PART 2 Financial Tools P5-19 Future value of an annuity For each case in the accompanying table, answer the questions that follow. Case B E meny Amount of annuity $ 2,500 30.000 11,500 6,000 Interest rate *%* 23^2 12 14 Deposit period (years a. Calculate the future value of the annuity assuming that it is (1) An ordinary annuity, (2) An annuity due. b. Compare your findings in parts all) and a(2). All else being identical, which type of annuity-- ordinary or annuity due—is preferable? Explain why,
QUESTION 5 Your client is currently 21 years old. The interest rate on the funds your client has available is 3.90%. Your client can make annual contributions of $6,000 per year. Your client wishes to retire at the age of 67 and has an expected lifetime of 89. Calculate the annual payment your client can receive in retirement. O a. $47,085 O b. $50,738 O c. $54,691 O d. $58,966 O e. $63,593
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Problem 5-10 Calculating Perpetuity Values [LO 1] The Maybe Pay Life Insurance Company is trying to sell you an investment policy that will pay you and your heirs $29,000 per year forever. Assume the required return on this investment is 7.5 percent. How much will you pay for the policy? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Policy value today
P Flag question Your employer has agreed to place year-end deposits of OMR 910 one year from today, OMR 1,820 two years from today, and OMR 2,730 three years from today into your retirement account. If your account earns 4% per year, how much money will you have in the account at the end of year three when the last deposit is made? Select one: a. OMR 5,607.06 b. OMR 6,805.52 c. OMR 6,087.66 d. OMR 5,853.52 e. OMR 5,831.34
Problem 5-9 Calculating Annuity Values (LO 1] Assume you deposit $5,400 at the end of each year into an account paying 10.5 percent interest. a. How much money will you have in the account in 17 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. How much will you have if you make deposits for 34 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) а. Future value b. Future value