•An insurance company offers to pay you $1,000 per year for 10 years if you will pay $6,710 up front. What rate is implicit in this 10-year annuity?
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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 annuityA friend who owns a perpetuity that promises to pay $1,000 at the end of each year, forever, comes to you and offers to sell you all of the payments to be received after the 25th year for a price of $1,001. At an interest rate of 10%, should you pay the $1,000 today to receive payment numbers 26 and onwards? What does this suggest to you about the value of perpetual payments?The Solvent Insurance Co. will pay you $4,750 a year for 15 years in exchange for $45,000 today. What interest rate will you earn on this annuity?
- A Sunlife Insurance offers a 7-year ordinary annuity with a guaranteed rate of 6.35% compounded annually. How much should you pay for one of these annuities if you want to receive payments of $10,000 annually over the 7-year period? Show solution.You purchase a $10, 000 annuity with payments at the end of each year for 30 years and an effective interest rate i = .04. The annuity pays $500 at the end of each year and an additional $X at the beginning of years 6 through 12. Find X.An insurance company offers you an end-of-year annuity of $48,000 per year for the next 20 years. They claim your return on the annuity is 9 percent. What should you be willing to pay today for this annuity? a. $408,672 b. $438,192 c. $398,144 d. $429,600
- You buy an annuity that will pay you $24,000 annually for 25 years. The payments are paid on the first day of each year. What is the value of this annuity today if the discount rate is 8.5 percent? 241309 266498 258319 251409 245621 A O BO .C DO E OWhat is the value of a 30-year annuity that pays $2500 a year? The annuity’s first payment will be received on year 11. Also, assume that the annual interest rate is 4 percent for years 1 through 10 and 5 percent hereafter.6.-American General offers a 10-yearannuity with a guaranteed rate of 5.88% compounded annually. How much should you pay for one of these annuities if you want to receive payments of $1300 annually over the 10 year period? How much should a customer pay for this annuity?
- 2. A friend who owns a perpetuity that promises to pay $2,000 at the end of each year, forever, comes to you and offers to give you the payments to be received from the 10th year through 30th year. How much would you pay for it when the interest rate is 10%?Uptown Insurance offers an annuity due with semiannual payments for 20 years at 6 percent interest. The annuity costs $200,000 today. What is the amount of each annuity payment?2. A friend who owns a perpetuity that promises to pay $1,000 at the end of each year,forever, comes to you and offers to sell you all of the payments to be received after the25th year for a price of $1,000. At an interest rate of 10%, should you pay the $1,000today to receive payment numbers 26 and onwards? What does this suggest to youabout the value of perpetual payments?