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Michael is planning for his retirement this year. One option that has been presented to him is the purchase of an annuity that would provide a $38,000 payment each year for the next 15 years. Click here to view the factor table. Calculate how much Michael should be willing to pay for the annuity if he can invest his funds at 7%. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to O decimal place, e.g. 58,971.) Payment $ eTextbook and Media

Michael is planning for his retirement this year. One option that has been presented to him is the purchase of an annuity that would provide a $38,000 payment each year for the next 15 years. Click here to view the factor table. Calculate how much Michael should be willing to pay for the annuity if he can invest his funds at 7%. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to O decimal place, e.g. 58,971.) Payment $ eTextbook and Media

Essentials Of Investments
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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Current Attempt in Progress Michael is planning for his retirement this year. One option that has been presented to him is the purchase of an annuity that would provide a $38,000 payment each year for the next years. Click here to view the factor table. Calculate how much Michael should be willing to pay for the annuity if he can invest his funds at 7%. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to O decimal place, e.g. 58,971.) Payment $ eTextbook and Media Save for Later Attempts: 0 of 3 used Submit Answer
Transcribed Image Text:Current Attempt in Progress Michael is planning for his retirement this year. One option that has been presented to him is the purchase of an annuity that would provide a $38,000 payment each year for the next years. Click here to view the factor table. Calculate how much Michael should be willing to pay for the annuity if he can invest his funds at 7%. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to O decimal place, e.g. 58,971.) Payment $ eTextbook and Media Save for Later Attempts: 0 of 3 used Submit Answer
APPENDIX 9.1 Present value of $1 received in n periods. Periods 4% 12345 5 6 7 8 9 10 11 THERE 0.6496 0.6246 0.6006 14 0.5775 15 0.5553 12 13 16 17 18 19 20 PVRI 1 2 3 = 4 5 6 7 8 9 10 11 12445 13 16 17 18 19 20 5% 0.9615 0.9524 0.9246 0.9070 APPENDIX 9.2 Present value of an annuity of $1 per period. Periods 4% 5% 6% 0.9615 0.9524 0.9434 1.8861 1.8594 1.8334 2.7751 2.7232 2.6730 3.6299 3.5460 3.4651 4.4518 4.3295 4.2124 0.8890 0.8638 0.8548 0.8227 0.8219 0.7835 PVA = 0.7903 0.7462 0.7050 0.6663 0.7599 0.7107 0.6651 0.6227 0.7307 0.6768 0.6274 0.5820 0.7026 0.6446 0.5919 0.5439 0.6756 0.6139 0.5584 0.5083 6% 7% 8% 9% 10% 11% 12% 13% 14% 16% 18% 20% 0.9434 0.9346 0.9259 0.9174 0.9091 0.9009 0.8929 0.8850 0.8772 0.8621 0.8475 0.8333 0.8900 0.8734 0.8573 0.8417 0.8264 0.8116 0.7972 0.7831 0.7695 0.7432 0.7182 0.6944 0.8396 0.8163 0.7938 0.7722 0.7513 0.7312 0.7118 0.6931 0.6750 0.6407 0.6086 0.5787 0.7921 0.7629 0.7350 0.7084 0.6830 0.6587 0.6355 0.6133 0.5921 0.5523 0.5158 0.4823 0.7473 0.7130 0.6806 0.6499 0.6209 0.5935 0.5674 0.5428 0.5194 0.4761 0.4371 0.4019 $1 (1 + i)" 0.5847 0.5268 0.4751 0.4289 0.3875 0.3505 0.3173 0.2875 0.2607 0.2366 0.1954 0.1619 0.5568 0.4970 0.4440 0.3971 0.3555 0.3186 0.2858 0.2567 0.2307 0.2076 0.1685 0.1372 0.5303 0.4688 0.4150 0.3677 0.3262 0.2897 0.2575 0.2292 0.2042 0.1821 0.1452 0.1163 0.5051 0.4423 0.3878 0.3405 0.2992 0.2633 0.2320 0.2046 0.1807 0.1597 0.1252 0.0985 0.4810 0.4173 0.3624 0.3152 0.2745 0.2394 0.2090 0.1827 0.1599 0.1401 0.1079 0.0835 0.6302 0.5963 0.5645 0.5346 0.5066 0.4803 0.4556 0.4104 0.3704 0.3349 0.5835 0.5470 0.5132 0.4817 0.4523 0.4251 0.3996 0.3538 0.3139 0.2791 0.5403 0.5019 0.4665 0.4339 0.4039 0.3762 0.3506 0.3050 0.2660 0.2326 0.5002 0.4604 0.4241 0.3909 0.3606 0.3329 0.3075 0.2630 0.2255 0.1938 0.4632 0.4224 0.3855 0.3522 0.3220 0.2946 0.2697 0.2267 0.1911 0.1615 0.5339 0.4581 0.3936 0.3387 0.2919 0.2519 0.2176 0.1883 0.1631 0.1415 0.1229 0.0930 0.0708 0.5134 0.4363 0.3714 0.3166 0.2703 0.2311 0.1978 0.1696 0.1456 0.1252 0.1078 0.0802 0.0600 0.4936 0.4155 0.3503 0.2959 0.2502 0.2120 0.1799 0.1528 0.1300 0.1108 0.0946 0.0691 0.0508 0.4746 0.3957 0.3305 0.2765 0.2317 0.1945 0.1635 0.1377 0.1161 0.0981 0.0829 0.0596 0.0431 0.0313 0.4564 0.3769 0.3118 0.2584 0.2145 0.1784 0.1486 0.1240 0.1037 0.0868 0.0728 0.0514 0.0365 0.0261 0.0541 0.0451 0.0376 5.2421 5.0757 4.9173 6.0021 5.7864 5.5824 6.7327 6.4632 6.2098 7.4353 7.1078 6.8017 8.1109 7.7217 7.3601 8.7605 8.3064 7.8869 9.3851 8.8633 8.3838 9.9856 9.3936 8.8527 10.5631 9.8986 9.2950 11.1184 10.3797 9.7122 0.1346 0.1122 0.0935 0.0779 0.0649 7% 8% 9% 10% 11% 12% 13% 14% 16% 18% 20% 0.9346 0.9259 0.9174 0.9091 0.9009 0.8929 0.8850 0.8772 0.8621 0.8475 0.8333 1.8080 1.7833 1.7591 1.7355 1.7125 1.6901 1.6681 1.6467 1.6052 1.5656 1.5278 2.6243 2.5771 2.5313 2.4868 2.4437 2.4018 2.3612 2.3216 2.2459 2.1743 2.1065 3.3872 3.3121 3.2397 3.1698 3.1024 3.0373 2.9745 2.9137 2.7982 2.6901 2.5887 4.1002 3.9927 3.8897 3.7907 3.6959 3.6048 3.5172 3.4331 3.2743 3.1272 2.9906 4.7665 4.6229 4.4859 4.3553 4.2305 4.1114 3.9975 3.8887 3.6847 3.4976 3.3255 5.3893 5.2064 5.0330 4.8684 4.7122 4.5638 4.4226 4.2883 4.0386 3.8115 3.6046 5.9713 5.7466 5.5348 5.3349 5.1461 4.9676 4.7988 4.6389 4.3436 4.0776 3.8372 6.5152 6.2469 5.9952 5.7590 5.5370 5.3282 5.1317 4.9464 4.6065 4.3030 4.0310 7.0236 6.7101 6.4177 6.1446 5.8892 5.6502 5.4262 5.2161 4.8332 4.4941 4.1925 7.4987 7.1390 6.8052 6.4951 6.2065 5.9377 5.6869 5.4527 5.0286 4.6560 4.3271 7.9427 7.5361 7.1607 6.8137 6.4924 6.1944 5.9176 5.6603 5.1971 4.7932 4.4392 8.3577 7.9038 7.4869 7.1034 6.7499 6.4235 6.1218 5.8424 5.3423 4.9095 4.5327 8.7455 8.2442 7.7862 7.3667 6.9819 6.6282 6.3025 6.0021 5.4675 5.0081 4.6106 9.1079 8.5595 8.0607 7.6061 7.1909 6.8109 6.4624 6.1422 5.5755 5.0916 4.6755 11.6523 10.8378 10.1059 9.4466 8.8514 8.3126 7.8237 7.3792 6.9740 6.6039 6.2651 5.6685 5.1624 4.7296 12.1657 11.2741 10.4773 9.7632 9.1216 8.5436 8.0216 7.5488 7.1196 6.7291 6.3729 5.7487 5.2223 4.7746 12.6593 11.6896 10.8276 10.0591 9.3719 8.7556 8.2014 7.7016 7.2497 6.8399 6.4674 5.8178 5.2732 4.8122 13.1339 12.0853 11.1581 10.3356 9.6036 8.9501 8.3649 7.8393 7.3658 6.9380 6.5504 5.8775 5.3162 4.8435 13.5903 12.4622 11.4699 10.5940 9.8181 9.1285 8.5136 7.9633 7.4694 7.0248 6.6231 5.9288 5.3527 4.8696 1 (1 + i)" i $1-
Transcribed Image Text:APPENDIX 9.1 Present value of $1 received in n periods. Periods 4% 12345 5 6 7 8 9 10 11 THERE 0.6496 0.6246 0.6006 14 0.5775 15 0.5553 12 13 16 17 18 19 20 PVRI 1 2 3 = 4 5 6 7 8 9 10 11 12445 13 16 17 18 19 20 5% 0.9615 0.9524 0.9246 0.9070 APPENDIX 9.2 Present value of an annuity of $1 per period. Periods 4% 5% 6% 0.9615 0.9524 0.9434 1.8861 1.8594 1.8334 2.7751 2.7232 2.6730 3.6299 3.5460 3.4651 4.4518 4.3295 4.2124 0.8890 0.8638 0.8548 0.8227 0.8219 0.7835 PVA = 0.7903 0.7462 0.7050 0.6663 0.7599 0.7107 0.6651 0.6227 0.7307 0.6768 0.6274 0.5820 0.7026 0.6446 0.5919 0.5439 0.6756 0.6139 0.5584 0.5083 6% 7% 8% 9% 10% 11% 12% 13% 14% 16% 18% 20% 0.9434 0.9346 0.9259 0.9174 0.9091 0.9009 0.8929 0.8850 0.8772 0.8621 0.8475 0.8333 0.8900 0.8734 0.8573 0.8417 0.8264 0.8116 0.7972 0.7831 0.7695 0.7432 0.7182 0.6944 0.8396 0.8163 0.7938 0.7722 0.7513 0.7312 0.7118 0.6931 0.6750 0.6407 0.6086 0.5787 0.7921 0.7629 0.7350 0.7084 0.6830 0.6587 0.6355 0.6133 0.5921 0.5523 0.5158 0.4823 0.7473 0.7130 0.6806 0.6499 0.6209 0.5935 0.5674 0.5428 0.5194 0.4761 0.4371 0.4019 $1 (1 + i)" 0.5847 0.5268 0.4751 0.4289 0.3875 0.3505 0.3173 0.2875 0.2607 0.2366 0.1954 0.1619 0.5568 0.4970 0.4440 0.3971 0.3555 0.3186 0.2858 0.2567 0.2307 0.2076 0.1685 0.1372 0.5303 0.4688 0.4150 0.3677 0.3262 0.2897 0.2575 0.2292 0.2042 0.1821 0.1452 0.1163 0.5051 0.4423 0.3878 0.3405 0.2992 0.2633 0.2320 0.2046 0.1807 0.1597 0.1252 0.0985 0.4810 0.4173 0.3624 0.3152 0.2745 0.2394 0.2090 0.1827 0.1599 0.1401 0.1079 0.0835 0.6302 0.5963 0.5645 0.5346 0.5066 0.4803 0.4556 0.4104 0.3704 0.3349 0.5835 0.5470 0.5132 0.4817 0.4523 0.4251 0.3996 0.3538 0.3139 0.2791 0.5403 0.5019 0.4665 0.4339 0.4039 0.3762 0.3506 0.3050 0.2660 0.2326 0.5002 0.4604 0.4241 0.3909 0.3606 0.3329 0.3075 0.2630 0.2255 0.1938 0.4632 0.4224 0.3855 0.3522 0.3220 0.2946 0.2697 0.2267 0.1911 0.1615 0.5339 0.4581 0.3936 0.3387 0.2919 0.2519 0.2176 0.1883 0.1631 0.1415 0.1229 0.0930 0.0708 0.5134 0.4363 0.3714 0.3166 0.2703 0.2311 0.1978 0.1696 0.1456 0.1252 0.1078 0.0802 0.0600 0.4936 0.4155 0.3503 0.2959 0.2502 0.2120 0.1799 0.1528 0.1300 0.1108 0.0946 0.0691 0.0508 0.4746 0.3957 0.3305 0.2765 0.2317 0.1945 0.1635 0.1377 0.1161 0.0981 0.0829 0.0596 0.0431 0.0313 0.4564 0.3769 0.3118 0.2584 0.2145 0.1784 0.1486 0.1240 0.1037 0.0868 0.0728 0.0514 0.0365 0.0261 0.0541 0.0451 0.0376 5.2421 5.0757 4.9173 6.0021 5.7864 5.5824 6.7327 6.4632 6.2098 7.4353 7.1078 6.8017 8.1109 7.7217 7.3601 8.7605 8.3064 7.8869 9.3851 8.8633 8.3838 9.9856 9.3936 8.8527 10.5631 9.8986 9.2950 11.1184 10.3797 9.7122 0.1346 0.1122 0.0935 0.0779 0.0649 7% 8% 9% 10% 11% 12% 13% 14% 16% 18% 20% 0.9346 0.9259 0.9174 0.9091 0.9009 0.8929 0.8850 0.8772 0.8621 0.8475 0.8333 1.8080 1.7833 1.7591 1.7355 1.7125 1.6901 1.6681 1.6467 1.6052 1.5656 1.5278 2.6243 2.5771 2.5313 2.4868 2.4437 2.4018 2.3612 2.3216 2.2459 2.1743 2.1065 3.3872 3.3121 3.2397 3.1698 3.1024 3.0373 2.9745 2.9137 2.7982 2.6901 2.5887 4.1002 3.9927 3.8897 3.7907 3.6959 3.6048 3.5172 3.4331 3.2743 3.1272 2.9906 4.7665 4.6229 4.4859 4.3553 4.2305 4.1114 3.9975 3.8887 3.6847 3.4976 3.3255 5.3893 5.2064 5.0330 4.8684 4.7122 4.5638 4.4226 4.2883 4.0386 3.8115 3.6046 5.9713 5.7466 5.5348 5.3349 5.1461 4.9676 4.7988 4.6389 4.3436 4.0776 3.8372 6.5152 6.2469 5.9952 5.7590 5.5370 5.3282 5.1317 4.9464 4.6065 4.3030 4.0310 7.0236 6.7101 6.4177 6.1446 5.8892 5.6502 5.4262 5.2161 4.8332 4.4941 4.1925 7.4987 7.1390 6.8052 6.4951 6.2065 5.9377 5.6869 5.4527 5.0286 4.6560 4.3271 7.9427 7.5361 7.1607 6.8137 6.4924 6.1944 5.9176 5.6603 5.1971 4.7932 4.4392 8.3577 7.9038 7.4869 7.1034 6.7499 6.4235 6.1218 5.8424 5.3423 4.9095 4.5327 8.7455 8.2442 7.7862 7.3667 6.9819 6.6282 6.3025 6.0021 5.4675 5.0081 4.6106 9.1079 8.5595 8.0607 7.6061 7.1909 6.8109 6.4624 6.1422 5.5755 5.0916 4.6755 11.6523 10.8378 10.1059 9.4466 8.8514 8.3126 7.8237 7.3792 6.9740 6.6039 6.2651 5.6685 5.1624 4.7296 12.1657 11.2741 10.4773 9.7632 9.1216 8.5436 8.0216 7.5488 7.1196 6.7291 6.3729 5.7487 5.2223 4.7746 12.6593 11.6896 10.8276 10.0591 9.3719 8.7556 8.2014 7.7016 7.2497 6.8399 6.4674 5.8178 5.2732 4.8122 13.1339 12.0853 11.1581 10.3356 9.6036 8.9501 8.3649 7.8393 7.3658 6.9380 6.5504 5.8775 5.3162 4.8435 13.5903 12.4622 11.4699 10.5940 9.8181 9.1285 8.5136 7.9633 7.4694 7.0248 6.6231 5.9288 5.3527 4.8696 1 (1 + i)" i $1-
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