An annuity offers to pay £8,700 per year for 20 years, and the nominal annual bank interest rate is 5%, compounded annually (this is not expected to change). A financial advisor offers to sell you this annuity for £100,000. Is this good value?
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A: Future Value = Deposit Amount * ( 1 + Peroidic rate )Number of periods
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- You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years. Which table will help you determine the value of your account at the end of 12 years? A. future value of one dollar ($1) B. present value of one dollar ($1) C. future value of an ordinary annuity D. present value of an ordinary annuityou are offered an annuity that will pay R17,000 per year for 7 years (the first payment will be made today). If you feel that the appropriate discount rate is 11%, what is the annuity worth to you today? 15. If you deposit R15,000 per year for 9 years (each deposit is made at the beginning of each year) in an account that pays an annual interest rate of 8%, what will your account be worth at the end of 9 years? 16. You plSuppose you are going to receive $11,000 per year for 8 years. The appropriate interest rate is 11 percent per year. Requirement 1: What is the present value of the payments if they are in the form of an ordinary (a)annuity (cash flow starts at the end of the first compounding period)? (Click to select) (b) What is the present value if the payments are an annuity due (cash flow starts at the beginning of the first compounding period)? (Click to select) Requirement 2: (a)Suppose you plan to invest the payments for 8 years, what is the future value if the payments are an ordinary annuity? (Click to select) (b)Suppose you plan to invest the payments for 8 years, what is the future value if the payments are an annuity due? (Click to select)
- You may purchase an annuity that will pay you 300000 in income per year starting one year from now and continuing for a total 22 years, or 22 payments. Assuming an annual risk-free interest rate of 4%, what is a fair price for this annuity?● An investment will provide you with $100 at the end of each year for the next 10 years. What is the present value of that annuity if the discount rate is 8% annually? • What is the present value of the above if the payments are received at the beginning of each year? • If you deposit those payments into an account earning 8%, what will the future value be in 10 years? • What will the future value be if you open the account with $1,000 today, and then make the $100 deposits at the end of each year?Your insurance company offered you an annuity that pays you $100 at the end of each year. The life of the annuity is 10 years. Assume that market interest rate you can earn on similar risky investments is 8%. What should be the present value of this annuity? If you are given the first payment immediately starting today, what should be the worth of this annuity? Which payment mode will you accept? What will be basis of your decision under time value of money concept?
- Suppose you're going to receive $7800 per year for five years. the appropriate discount rate is 7.5%. A.What is the present value of the payments if they are in the form of an ordinary annuity? What is the present value if the payments are an annuity due? B. Suppose you plan to invest the payments for five years. What is the future value if the payments are an ordinary annuity? What if the payments are in annuity due? C. Which has the higher present value, the ordinary annuity or the annuity due? Which has a higher future value? Will this always be true?Suppose you are going to receive Rs. 63,800 per year for five years. The appropriate interest rate is 7.3 What is the present value of the payments if they are in the form of an ordinary annuity? What is the present value if the payments are an annuity due? Suppose you plan to invest the payments for five years. What is the future value if the payments are an ordinary annuity? What if the payments are an annuity due? Which has the highest present value, the ordinary annuity or annuity due? Which has the highest future value? Will this always be true? Note- Answer all the parts of the questionA company wants to determine how much it should pay to purchase a particular ordinary annuity today. The annuity consists of cash flows of $ 8,000 at the end of each year for 5 years. The firm requires the annuity to provide a minimum return of 10%.Calculate the amount(Means you need to calculate PV of ordinry annuity). However anlyse how the answer will change if it a annuity due.
- Suppose you are going to receive $13,500 per year for five years. The interest rate is 8.4%a. What is the present value of the payments if they are in the form of an ordinary annuity? What is the present value if the payments are an annuity due?b. Suppose you plan to invest the payments for five years. What is the future value if the payments are an ordinary annuity? What if the payments are annuity due?c. Which has the highest present value (future value), the ordinary annuity or annuity due?You may purchase an annuity that will pay you ¥300,000 in income per year starting one year from now and continuing for a total of 22 years, or 22 payments. Assuming an annual risk-free interest rate of 4%. What is a fair price for this annuity? Round your answer to the nearest yenSuppose you are going to receive $10,000 per year for 5 years. The appropriate interest rate is 11%. What is the present value of the payments if they are in the form of an ordinary annuity?