a. What is the amount of the annuity purchase required if you wish to receive a fixed payment of $250,000 for 20 years? Assume that the annuity will earn 12 percent per year. b. Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 20-year annuity is $1.5 million and the annuity earns a guaranteed annual return of 12 percent. The payments are to begin at the end of the current year. c. Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 20-year annuity is $1.5 million and the annuity earns a guaranteed annual return of 12 percent. The payments are to begin at the end of five years. (For all requirements, do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16))

a. What is the amount of the annuity purchase required if you wish to receive a fixed payment of $250,000 for 20 years? Assume that the annuity will earn 12 percent per year. b. Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 20-year annuity is $1.5 million and the annuity earns a guaranteed annual return of 12 percent. The payments are to begin at the end of the current year. c. Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 20-year annuity is $1.5 million and the annuity earns a guaranteed annual return of 12 percent. The payments are to begin at the end of five years. (For all requirements, do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16))

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 16P

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