Your rich uncle dies, leaving you a life insurance policy worth $120,000. The insurance company also offers you an option to receive $8,225 per year for 25 years, with the first payment due today. You should choose the immediate payout if the interest rate is greater than a. 5.27% b. 5.76% c. 7.75% d. 4.66%

Your rich uncle dies, leaving you a life insurance policy worth $120,000. The insurance company also offers you an option to receive $8,225 per year for 25 years, with the first payment due today. You should choose the immediate payout if the interest rate is greater than a. 5.27% b. 5.76% c. 7.75% d. 4.66%

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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If George wants to purchase a new home for $400,000 and finance $320,000 with a 4%, 30 year mortgage with a monthly payment of 12,697.43. How much interest would be paid in the first 12th payment? A.) 1,049.47 B.)1,504.45 C.) 1,240.67 D.) 1,120.67
You deposit $11,600 annually into a life insurance fund for the next 10 years, at which time you plan to retire. Instead of a lump sum, you wish to receive annuities for the next 20 years. What is the annual payment you expect to receive beginning in year 11 if you assume an interest rate of 8 percent for the whole time period? (Do not round Intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16)) Annuities per year over the next twenty years
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?
If I purchase a home for $150,000. I do a fixed 30-year mortgage at 6%. I have to put down 10% or $15,000. What would be my annual payment? A. $6,456.72 B. $9,376.24 C. $9,712.72 D. $12,345.67
At age 30, to save for retirement, you decide to deposit $300 into an IRA at the end of each month at an interest rate of 6% per year compounded monthly. How much will you have from the IRA when you retire at age 65? Use this formula: Find how much of the total amount is from interest.
Let’s assume that you plan to purchase a house which is selling for $350,000 today. You will make a monthly payment for the next 30 years, with an annual interest rate of 3%. What will be the amount of your monthly mortgage (i.e., home loan) payment? answer choices $1,890.37 $1,400.01 $1,475.61 $1,228.14
You are the beneficiary of a life insurance policy. The insurance company informs you that you have two options for receiving the insurance proceeds. You can receive a lump sum of $400,000 today or receive payments of $16,000 a year for 15 years. You can earn 6 percent on your money. Which option should you take and why?
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?
1. Pensions Meg's pension plan is an annuity with a guaranteed return of 7% per year (compounded quarterly). She would like to retire with a pension of $20,000 per quarter for 25 years. If she works 41 years before retiring, how much money must she and her employer deposit each quarter? (Round your answer to the nearest cent.) 2. You want to buy a 5 year bond with a maturity value of $8,000, and you wish to get a return of 5.5% annually. How much (in dollars) will you pay? (round to nearest cent) 3. Calculate, to the nearest cent, the future value FV (in dollars) of an investment of $10,000 at the stated intrest rate after stated amount of time. 12.9% per year, compounded monthly, after 9 years FV=$ 4.Jennifer's pension plan is an annuity with a guaranteed return of 7% per year (compounded monthly). She can afford to put $300 per month into the fund, and she will work for 35 years before retiring. If her pension is then paid out monthly based on a 25 year payout, how much will she…
To insure you, Assurances Nochance Ltd offers the following plan: you will pay 20 annual payments of $8,000 starting one year from today. Then, in year 21, you or your heirs will receive a pension for the following 15 years. The discount rate used by the company to calculate your pension is 6%. (a) What is the size of your annual pension? (b) Ifyoucouldtakeaone‐timelumpsumpayment25yearsfromtodayinsteadofthepension,how high would the equivalent lump sum payment have to be?.
You have purchased a guaranteed investment contract (GIC) from an insurance firm that promises to pay you a 5% compound rate of return per year for 6 years. If you pay $20,000 for the GIC today and receive no interest along the way, you will get __________ in 6 years (to the nearest dollar). (Round your answer to the nearest whole dollar).

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