You are given the following information about a person aged exactly x: 9x = 0.03, 9x+1 = 0.04, 9x+2 = 0.05 A Term Life Insurance contract with death benefit of 50,000 is set on this life, with a coverage period of n = 3 years. What is the Expected Present Value of the death benefit, if the annual effective interest rate is 8% ? [As usual, a benefit is paid at the end of the year of death, if death occurs within the coverage period.] Select one: O a. 5292.2 O b. 5088.1 O c. 6010.5 O d. 4704.4 e. 4900.2

You are given the following information about a person aged exactly x: 9x = 0.03, 9x+1 = 0.04, 9x+2 = 0.05 A Term Life Insurance contract with death benefit of 50,000 is set on this life, with a coverage period of n = 3 years. What is the Expected Present Value of the death benefit, if the annual effective interest rate is 8% ? [As usual, a benefit is paid at the end of the year of death, if death occurs within the coverage period.] Select one: O a. 5292.2 O b. 5088.1 O c. 6010.5 O d. 4704.4 e. 4900.2

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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Your pension plan is an annuity with a guaranteed return of 4% per year (compounded quarterly). You can afford to put $1,600 per quarter into the fund, and you will work for 40 years before retiring. How much money (in dollars) has accumulated in the retirement fund when you retire? (Round your answer to the nearest cent.) $ After you retire, you will be paid a quarterly pension based on a 25-year payout. How much (in dollars) will you receive each quarter? (Round your answer to the nearest cent.)
Assume that Social Security promises you $34,000 per year starting when you retire 45 years from today (the first $34,000 will get paid 45 years from now). If your discount rate is 6%, compounded annually, and you plan to live for 12 years after retiring (so that you will receive a total of 13 payments including the first one), what is the value today of Social Security's promise?
Annuity X pays $1,200 at each year-end for 15 years. Annuity Y pays $1,100 at the beginning of each year for 15 years. The effective annual rate is 8%. Which one is correct? Annuity X has a higher present value than Annuity Y. Annuity Y has a higher present value than Annuity X. Annuity X has the same present value as Annuity Y.
You decide to make monthly payments into a retirement fund earning 4.75% compounded monthly. Note: Payments are made at the end of each period. Use this information for the questions below. Use the Saving for Retirement information above to answer this question. If your monthly payments are $147, how much will you have in your retirement fund after 40 years? $_________. Round to the nearest dollar.
Someone needs to make the following annuity payments to an individual: £445 paid at the end of each month during the first 15 years and then £448 paid at the end of each 4 months for the following 8 years. Assuming an effective monthly interest rate of 1.3% throughout the entire period, how much total fund the insurer needs to hold today in order to meet these payments? correct answer = 31470.44, NO TABLES, ONLY FORMULAS, PLEASE
Why are common sized financial statements useful? How do they differ from traditional financial statements in the way that they are calculated?
Your insurance company offered you an annuity that pays you $100 at the end of each year. The life of the annuity is 10 years. Assume that market interest rate you can earn on similar risky investments is 8%;a. What should be the present value of this annuity?b. If you are given the first payment immediately starting today, what should be the worth of this annuity?
5) Consider a whole life annuity-due of 46,000 per year issued to a life age 65. Calculate the probability that the sum of total undiscounted benefit payments is greater than the expected present value of the annuity at issue. Use the SULT with 5% interest.
You wish to retire in 11 years, at which time you want to have accumulated enough money to receive an annual annulty of $26,000 for 16 years after retirement. During the period before retirement you can earn 12 percent annually, while after retirement you can earn 14 percent on your money. What annual contributions to the retirement fund will allow you to receive the $26,000 annuity? Use Appendix C and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods. Note: Do not round Intermediate calculations. Round your final answer to 2 decimal places. Annual contribution
A 6-year term insurance policy has an annual premium of $500, and at the end of 6 years, all payments and interest are refunded. What lump-sum deposit is necessary to equal this amount if you assume an interest rate of 2.5% compounded annually? (a) State the type. future value present value of an annuity sinking fund amortization ordinary annuity (b) Answer the question. (Round your answer to the nearest cent.) $
Your uncle is about to retire, and he wants to buy an annuity that will provide him with $97,000 of income a year for 20 years, with the first payment coming immediately. The going rate on such annuities is 5.45%. How much would it cost him to buy the annuity today? a. $1,192,059.14 b. $1,164,011.03 c. $1,195,837.87 d. $1,261,011.03 e. $1,227,449.63
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