not use ai please You are a CPA, and you have a client who has just won a $10,000,000 lottery. The client is not financially experiencedand comes to you for advice. He has the option of receiving the winnings annually for 30 years or taking a lump sumpayout discounted at 6% (this is not a one-time discount - it is the market rate used to calculate the PV of the annuity). In order to advise him, you must consider his relative inexperience with managing large sums of money and otherfactors as well. You research other lottery winners so you can give your client some "worst-case" examples. You calculatethe best financial deal for him but recognize that this is both a quantitative and qualitative decision.What additional questions would you ask your client? What advice would you give your client?

Questions to Ask the Client:What are your immediate financial needs and goals?The importance of…

Answered: You are a CPA, and you have a client…

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter14: Planning For Retirement

Section: Chapter Questions

Problem 8FPE

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You are a financial adviser working with a client who wants to retire in eight years. The client has a savings account with a local bank that pays 7 percent annual interest. The client wants to deposit an amount that will provide her with $1,001,000 when she retires. Currently, she has $300,400 in the account. (FV of $1, PV of $1, FVA of $1, and PVA of $1) Note: Use the appropriate factor(s) from the tables provided. Required: How much additional money should she deposit now to provide her with $1,001,000 when she retires? Note: Round your intermediate calculations and final answer to nearest whole dollar.
You are a financial adviser working with a client who wants to retire in eight years. The client has a savings account with a local bank that pays 9% annual interest. Tne client warts to deposit an amount that will provide her with $1,000,000 when she retires. Currently, she has $300,000 in the account. EV of $1, PVof $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.) How much additional money should she deposit now to provide her with $1,000,000 when she retires? (Round your answer to nearest whole dollar.) Additional deposit amount
You decide to go into the earthquake insurance business. You offer to pay $250,000 to any insured person who experiences a "substantial" loss. If the probability anyone suffers "substantial" loss from a quake in any year is 0.4%, what annual premium should you charge so that your expected annual profit is $500 per policy?
In this question, consider that you are 60 years old and considering retirement. An insurance company offers to sell you the following Annuity in exchange for a portion of your IRA: • The Annuity commits to paying you 2,000 per month for the next 20 years, with the first payment to be made beginning one month from today. • Your price of the Annuity is $250,000 paid by you today from your IRA. The insurance company is rated AAA, but the investment is not FDIC insured like bank deposits. What is the expected annual rate of return on this investment? What is the Yield-on this investment? That is what is the annual expected rate of return? From an investment point of view, do you consider this a good investment today? Discuss why, or why not.
You obtain a 30-year home mortgage and your monthly payment is $3000.00. Instead of paying monthly as required, you ask the bank to allow you to pay $36,000 at the end of each year; the bank rejects that idea but says you could pay $36,000 at beginning of each year. Why does the bank reject your proposal and would you accept bank's suggestion
Benjamin knows that he will be receiving $100,311 to settle an insurance claim, but he will not actually be paid for another 3 months. Needing cash now, he is considering an offer from a finance company to buy this payment from him by paying him cash today. The annual simple discount rate they are offering him is 27%. How much would he receive if he takes this deal? Round your answer to the nearest dollar.
A man plans to take a vacation in 5 years. He wants to buy a certificate of deposit for $1300 that he will cash in for the trip. What is the minimum annual interest rate he must obtain on the certificate if he needs at least $1500 for the trip? Assume that the interest on the loan is computed using simple interest. The rate he must obtain is
C. D. Rom has just given an insurance company $32,500. In return, he will receive an annuity of $3,800 for 20 years. At what rate of return must the insurance company invest this $32,500 in order to make the annual payments? Use Appendix D for an approximate answer, but calculate your final answer using the financial calculator method. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Rate of return %
Suppose you are in charge of annuities for a life insurance company. A customer comes in and wants to buy an annuity that will pay her a fixed amount each month for the rest of her life. She has $1 million to buy the annuity. Explain how you would determine the monthly payment she would get. How would the monthly payment be affected by a rise in interest rates
Your brother is considering the purchase of a home rather than renewing the lease on his two-bedroom apartment. He is currently paying $800 per month for rent. He has asked you to help decide what sort of home he might be able to afford with his current monthly rent payment. His bank offers first-time home buyers (with good credit) a 25-year mortgage at a fixed rate of 8.95%. Use this information to answer the questions below. Express your answers rounded correctly to the nearest cent! () If the cost of insurance and property taxes is about $290 per month in the neighborhood where he'd like to live, what monthly mortgage payment can he afford? (Refer to your class notes for the formula.) Payment = $ 650 (i) Use Excel's P function to determine how much your sister could afford to borrow for a home. Amount to Borrow $ 629.9
Your are in need of cash and turn to your cousin, who offered to lend you some money. You decide to borrow $1450 and agree to pay back $1660 in two years? Rate of interest charged by cousin ?
You plan to purchase a house for $166,000 using a 15-year mortgage obtained from your local bank. You will make a down payment of 15 percent of the purchase price. You will not pay off the mortgage early. Assume the homeowner will remain in the house for the full term and ignore taxes in your analysis. Your bank offers you the following two options for payment. Option 1: Mortgage rate of 7 percent and zero points Option 2: Mortgage rate of 6.75 percent and 3 points Which option should you choose? Option 1 None is the correct answer Option 2 Indifferent between the two options

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