Intermediate Accounting
1st Edition
ISBN: 9780132162302
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Chapter 7, Problem 7.18E
To determine
The option that should be chosen by J.
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A policyholder wishes to annuitize the cash value of her insurance policy at retirement. She desires an annual payment of $97.8,000 per year and the cash value is expected to be $1.5 million at retirement. Approximately how many payments can she expect to receive if annuity interest rates are 5.739 percent? (Do not round intermediate calculations. Round your answer to a whole number.)
9. Implied interest rate and period
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9. Implied interest rate and period
Consider the case of the following annuities, and the need to compute either their expected rate of return or duration.
Jacob needed money for some unexpected expenses, so he borrowed $2,138.41 from a friend and agreed to repay the loan in three equal installments of $800 at the end of each year. The agreement is offering an implied interest rate of .
Jacob’s friend, Devan, wants to go to business school. While his father will share some of the expenses, Devan still needs to put in the rest on his own. But Devan has no money saved for it yet. According to his calculations, it will cost him $31,897 to complete the business program, including tuition, cost of living, and other expenses. He has decided to deposit $3,800 at the end of every year in a mutual fund, from which he expects to earn a fixed 6% rate of return. It will take approximately for Devan to save enough money to go to business school.
Chapter 7 Solutions
Intermediate Accounting
Ch. 7 - Prob. 7.1QCh. 7 - Prob. 7.2QCh. 7 - If interest is compounded more than once a year,...Ch. 7 - Prob. 7.4QCh. 7 - Can an ordinary annuity table be used to determine...Ch. 7 - Prob. 7.6QCh. 7 - Is the present value of an ordinary annuity more...Ch. 7 - Prob. 7.8QCh. 7 - Simple Interest. Assume Shafer Corporation...Ch. 7 - Compound Interest. Assume Shafer Corporation...
Ch. 7 - Prob. 7.3BECh. 7 - Prob. 7.4BECh. 7 - Prob. 7.5BECh. 7 - Present Value of a Single Sum, Compound Interest....Ch. 7 - Future Value of a Single Sum, Compound Interest....Ch. 7 - Prob. 7.8BECh. 7 - Present Value of a Single Sum, Compounded Interest...Ch. 7 - Prob. 7.10BECh. 7 - Present Value of a Single Sum, Calculating Time...Ch. 7 - Future Value of an Ordinary Annuity. An...Ch. 7 - Future Value of an Annuity Due. Mariah Carey...Ch. 7 - Future Value of an Ordinary Annuity: Calculating...Ch. 7 - Present Value of an Ordinary Annuity. CB...Ch. 7 - Present Value of an Annuity Due, Semiannual...Ch. 7 - Prob. 7.17BECh. 7 - Ordinary Annuity, Annuity Due, Using Interest...Ch. 7 - Prob. 7.2ECh. 7 - Prob. 7.3ECh. 7 - Prob. 7.4ECh. 7 - Prob. 7.5ECh. 7 - Prob. 7.6ECh. 7 - Prob. 7.7ECh. 7 - Future Value of an Ordinary Annuity, Future Value...Ch. 7 - Single Sum, Solving for Other Variables. Two...Ch. 7 - Ordinary Annuity, Solve for Interest Rate,...Ch. 7 - Present Value, Note Payable Prices. Wiz Khalifa...Ch. 7 - Future Value of a Deterred Annuity. Lenny Shafer...Ch. 7 - Prob. 7.13ECh. 7 - Present Value of an Ordinary Annuity, Present...Ch. 7 - Prob. 7.15ECh. 7 - Prob. 7.16ECh. 7 - Future Value of an Annuity Due, Decision Making....Ch. 7 - Prob. 7.18ECh. 7 - Prob. 7.19ECh. 7 - Prob. 7.20ECh. 7 - Prob. 7.21ECh. 7 - Prob. 7.22ECh. 7 - Prob. 7.1PCh. 7 - Present Value, Present Value of an Ordinary...Ch. 7 - Present Value, Present Value of an Annuity Due,...Ch. 7 - Prob. 7.4PCh. 7 - Prob. 7.5PCh. 7 - Prob. 7.6PCh. 7 - Prob. 7.7PCh. 7 - Present Value of an Annuity Due, Deferred...Ch. 7 - Present Value of an Ordinary Annuity, Present...Ch. 7 - Future Value of an Ordinary Annuity, Deferred...Ch. 7 - Present Value, Present Value of an Ordinary...Ch. 7 - Prob. 7.12PCh. 7 - Prob. 7.13PCh. 7 - Expected Cash Flows. Hiteck Electronics sells a...Ch. 7 - Prob. 7.15P
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- 9. Implied interest rate and period Consider the case of the following annuities, and the need to compute either their expected rate of return or duration. A. Anthony inherited an annuity worth $3,811.62 from his uncle. The annuity will pay him four equal payments of $1,100 at the end of each year. The annuity fund is offering a return of . B. Anthony’s friend, Jack, wants to go to business school. While his father will share some of the expenses, Jack still needs to put in the rest on his own. But Jack has no money saved for it yet. According to his calculations, it will cost him $32,406 to complete the business program, including tuition, cost of living, and other expenses. He has decided to deposit $4,200 at the end of every year in a mutual fund, from which he expects to earn a fixed 10% rate of return. It will take approximately for Jack to save enough money to go to business school.arrow_forwardplease answerarrow_forwardA person agreed with a bank to deposit an amount of 500 dinars at the end of each year starting from the year 2000 in order to be able to buy an apartment by the end of 2020. If he knows that this person has deposited only 15 payments, and that the compound interest rate is 2% annually, the total payments are required to be found at the end of the year. 2020.arrow_forward
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How To Calculate The Present Value of an Annuity; Author: The Organic Chemistry Tutor;https://www.youtube.com/watch?v=RU-osjAs6hE;License: Standard Youtube License