Second Best Insurance company is advertising a new product to retirees looking to invest their 401(K) retirement accumulations. The idea is this: give us, Second Best, the lump sum of $720 today and we'll then give you, the retiree, an annuity of $230 to be received at the end of each year, beginning one year from today, for 6 consecutive years. From the standpoint of the retiree, calculate the NPV of this product if the required rate of return is 2%. $ Place your answer in dollars and cents. Indicate any negative amounts (if applicable) with a minus sign in front of the number. Do not include a dollar sign in your answer. Work all calculations using at least 4 decimal places of accuracy.

Second Best Insurance company is advertising a new product to retirees looking to invest their 401(K) retirement accumulations. The idea is this: give us, Second Best, the lump sum of $720 today and we'll then give you, the retiree, an annuity of $230 to be received at the end of each year, beginning one year from today, for 6 consecutive years. From the standpoint of the retiree, calculate the NPV of this product if the required rate of return is 2%. $ Place your answer in dollars and cents. Indicate any negative amounts (if applicable) with a minus sign in front of the number. Do not include a dollar sign in your answer. Work all calculations using at least 4 decimal places of accuracy.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 32P

See similar textbooks

Similar questions

Second Best Insurance company is advertising a new product to retirees looking to invest their 401(K) retirement accumulations. The idea is this: give us, Second Best, the lump sum of $660 today and we'll then give you, the retiree, an annuity of $320 to be received at the end of each year, beginning one year from today, for 5 consecutive years. From the standpoint of the retiree, calculate the NPV of this product if the required rate of return is 14%.
Please help me with this question :) A detailed answer will be much appreciated.
PLEASE ANSWER ASAP AND CORRECTLY USING ENGINEERING ECONOMICS!
Present value. Standard Insurance is developing a long-life insurance policy for people who outlive their retirement nest egg. The policy will pay out $200,000 on your 85th birthday. You must buy the policy on your 62nd birthday. The insurance company can earn 9% on the purchase price of your policy. What is the minimum purchase price the insurance company should charge for this policy?
An insurance agent just offered you a new insurance product that will provide you with $1,959.20 13 years from now if you invest $400 today. What annual rate of interest would you earn if you invested in this product?
You have estimated your future retirement income needs and, after taking Social Security into account, you have determined that you will have an pretax income shortfall of $100,000 in your first year of retirement at age 65. How much will you need to have saved by then, assuming you want to have your retirement income increase with inflation, but are willing to spend down your principal over time? Assume that you will live for 40 years in retirement, inflation will average 3% and you can earn 7% on your investments. (Hint: Use the inflation - adjusted annuity equation). You have estimated your future retirement income needs and, after taking Social Security into account, you have determined that you will have an pretax income shortfall of $100,000 in your first year of retirement at age 65. How much will you need to have saved by then, assuming you want to have your retirement income increase with inflation, but are willing to spend down your principal over time? Assume that you will…
Using the "Human Life Value" method, how much life insurance should you purchase if you have 45 years until retirement, an annual income of $65,100 received at the start of each years, and a time value of money of 9%? (Assume 80% income replacement, ignore taxes and inflation.)
You plan to retire in 20 years. At the point of retirement, you want to be able to withdraw 25478 at the end of each year forever. Assume that you earn a 7.11% rate of return prior to retirement and an 4.54% rate of return after retirement. If you do not want to make any further contributions to your retirement fund, how much do you need today? Round answer to the nearest dollar.
You would like to have enough money saved to receive a $90,000 per year perpetuity after retirement. The annual interest rate is 8 percent. Required: How much would you need to have saved in your retirement fund to achieve this goal? a) Assume that the perpetuity payments start on the day of your retirement. b) Assume that the perpetuity payments start one year from the date of your retirement.
You are considering a retirement savings. For this you will need to determine following information. Average starting salary of you major. $73,000 Your annual retirement savings amount. 8% of annual income Your age when you start working. 23 years old Your age when you plan to retire. 58 Retirement account investment vehicle. This will determine the growth rate. ? idk what this is... When I retire I want to open a ice cream shop (this might help answer the question) Create an excel table with your age column, annual contribution, annual account balance. Re-do the calculation with monthly contribution and find your account balance at your retirement. Submit excel table with all your information.
J and J are looking to save for retirement and the following applies: Estimated Income Needed (Annual): $ 50,000 Estimated Social Security Benefit and Pension (annual): $ 35,000 Inflation factor is 3% for 30 years Anticipated Return on Assets held after retirement is 6% Based on the information above, please estimate how much additional retirement savings should J and J have at retirement to meet their financial goals.
An insurance agent has been attempting to convince you to purchase an savings plan towards your retirement but you are not convinced of its value. After all, you are young, and have many years to prepare for this. He proposes that you save $325 at the beginning of every month for 30 years, in an account that pays 12% annual interest, compounded monthly. Required: a) Calculate the value of your savings at the end of 30 years. Please answer this question showing all working.