Questions i) Assume you are a 20-year-old female and want to buy OMR 110,000face value scheme, what is the annual premium using a 20-year fixed rate scheme? ii) Assume your father who is 40 years old wants to buy OMR 110,000face value policy. He wants to pay premium semi-annually. How much will be the premium using 20- year fixed rate policy? iii) Compare the annual and semi-annual premiums; explain which one is the better deal? iv) Instead of buying insurance for retirement, if your father invested OMR 110,000now at 10% compounded annually, how much will be in his account after 5 years? v) If he invests OMR 110,000now at 10 % simple interest annually, how much will be in his account after 5 years? vi) As an investor, which method of interest is more beneficial to your father? Justify your answer.

Questions i) Assume you are a 20-year-old female and want to buy OMR 110,000face value scheme, what is the annual premium using a 20-year fixed rate scheme? ii) Assume your father who is 40 years old wants to buy OMR 110,000face value policy. He wants to pay premium semi-annually. How much will be the premium using 20- year fixed rate policy? iii) Compare the annual and semi-annual premiums; explain which one is the better deal? iv) Instead of buying insurance for retirement, if your father invested OMR 110,000now at 10% compounded annually, how much will be in his account after 5 years? v) If he invests OMR 110,000now at 10 % simple interest annually, how much will be in his account after 5 years? vi) As an investor, which method of interest is more beneficial to your father? Justify your answer.

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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c) Man - Duen wants to buy a $28,000.00 T - bill that matures on 2019 - 12 - 08. His target price is $27,729.66, the (annual) simple interest rate is 3.120% and the daycount convention is ACT /360. What is the last date on which he can still buy the T - bill? How much does he pay?
Suppose that you take out an unsubsidized Stafford loan on September 1 before your junior year for $45004500 and plan to begin paying it back on December 1 after graduation and grace period 27 months later. The interest rate is 6.8%. How much of what you will owe will be interest?$Round your answer to the nearest cent.
Assume that you just inherited an annuity that will pay you $10,000 per year for 10 years, with the first payment being made today. A friend of your mother offers to give you $60,000 for the annuity. If you sell it, what rate of return would your mother’s friend earn on his investment? If you think a “fair” return would be 6%, how much should you ask for the annuity? What keys do I need to enter in a financial calculator to get the answers of (13.70%, $78,016.92)/ only show me the keys to enter in a financial calculaotr. not excel and not algebra
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4) Retirement: You have just retired from your company after working for twenty years. Your company provides a retirement package and gives you the option of i) receiving $250,000 today, or ii) receiving $350,000 in five years (T=5). What option would you select if the interest rate is R=5%? What option would you select if the interest rate is R=10%? What interest rate would make the present value of both options equal? (Hint: use Excel’s Data-What If - Goal Seek to solve for the interest rate T).
your parents are giving you $220 a month for 4 years while you are in college. At an interest rate of .51 percent per month, what are these payments worth to you when you first start college?
ou decide to replace your income of $70,000 a year in retirement for 30 years. How much do you need in your retirement account the day you retire to make that happen, assuming a real interest rate of 3%?
An individual (with log-utility) wants to maximize her happiness level over her adolescence and adult periods. At the age 18 the individual inherits one hundred thousand dollars and must decide how much to consume now (when she is young, period t) and how much to save for her adulthood (period t +1) to maximize the sum of utility over different life stages. The bank will pay interest rate of 5% of every dollar she deposits. The individual discounts future utilities at ß = 0.8. What is the optimal consumption in the adolescent period? 55555.56 55561.55 55558.55 55564.56

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