11. Your grandaunt wants to buy an (ordinary) annuity that will pay her cost of living of $70,000 per year for 20 years. If the quoted interest rate today is 5% and the annuity compounds monthly, how much does this annuity cost? 20 9544 a. $872,354.72 gively b. $865,404.52 c. $883,897.66 d. $863,824.15 12. After graduation, you get a great job. You budget $1,000 per month towards housing. You'd like to buy a house. Assume that the interest rate=4% for a 30-year mortgage. a. How much can you borrow? i. $209,461.24 ii. $207,504.40 iii. $694,049.40 iv. $24,999.98 b. Eight years into the mortgage, your company decides to relocate you to Hawaii. How much must you pay the bank to pay off your mortgage? (What is the balance left on the loan?) C. i. $207,018.52 ii. $175,382.89 iii. $113,461.24 iv. $153,604.91 Interest paid on mortgages are tax deductible. What is the interest you paid in year 8? i. $12,000.00 ii. $7,121.66 iii. $4,878.34 iv. $7,210.45 13. Your grandfather just retired and has $825,000 that he'd like to turn into an annuity. He is considering three different annuity options. He's planning to have the annuity last him 15 years. Which option should he pick and why? a. Quarterly ordinary annuity of $24,300. b. Monthly ordinary annuity of $8,050. c. Monthly annuity due of $8,000.
11. Your grandaunt wants to buy an (ordinary) annuity that will pay her cost of living of $70,000 per year for 20 years. If the quoted interest rate today is 5% and the annuity compounds monthly, how much does this annuity cost? 20 9544 a. $872,354.72 gively b. $865,404.52 c. $883,897.66 d. $863,824.15 12. After graduation, you get a great job. You budget $1,000 per month towards housing. You'd like to buy a house. Assume that the interest rate=4% for a 30-year mortgage. a. How much can you borrow? i. $209,461.24 ii. $207,504.40 iii. $694,049.40 iv. $24,999.98 b. Eight years into the mortgage, your company decides to relocate you to Hawaii. How much must you pay the bank to pay off your mortgage? (What is the balance left on the loan?) C. i. $207,018.52 ii. $175,382.89 iii. $113,461.24 iv. $153,604.91 Interest paid on mortgages are tax deductible. What is the interest you paid in year 8? i. $12,000.00 ii. $7,121.66 iii. $4,878.34 iv. $7,210.45 13. Your grandfather just retired and has $825,000 that he'd like to turn into an annuity. He is considering three different annuity options. He's planning to have the annuity last him 15 years. Which option should he pick and why? a. Quarterly ordinary annuity of $24,300. b. Monthly ordinary annuity of $8,050. c. Monthly annuity due of $8,000.
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 6MC: You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years....
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Question
Please answer question 13 first and then 12 and 11. Thank you
Transcribed Image Text:mily
a. $4,844.75
b. $7,095.77
c. $4,776.21
d. $7,164.31
e. $4,970.26
11. Your grandaunt wants to buy an (ordinary) annuity that will pay her cost of living of $70,000 per
year for 20 years. If the quoted interest rate today is 5% and the annuity compounds monthly,
how much does this annuity cost?
9544,
a. $872,354.72
b. $865,404.52
c. $883,897.66
d. $863,824.15
uc
is wisher
orgivaly
12. After graduation, you get a great job. You budget $1,000 per month towards housing. You'd like
to buy a house. Assume that the interest rate=4% for a 30-year mortgage.
a. How much can you borrow?
i. $209,461.24
ii. $207,504.40
iii.
$694,049.40
iv. $24,999.98
b. Eight years into the mortgage, your company decides to relocate you to Hawaii. How
much must you pay the bank to pay off your mortgage? (What is the balance left on the
loan?)
i. $207,018.52
ii. $175,382.89
iii. $113,461.24
iv. $153,604.91
c. Interest paid on mortgages are tax deductible. What is the interest you paid in year 8?
i. $12,000.00
ii. $7,121.66
iii. $4,878.34
iv. $7,210.45
13. Your grandfather just retired and has $825,000 that he'd like to turn into an annuity. He is
considering three different annuity options. He's planning to have the annuity last him 15 years.
Which option should he pick and why?
a. Quarterly ordinary annuity of $24,300.
b. Monthly ordinary annuity of $8,050.
c. Monthly annuity due of $8,000.
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