Barb Muller wins the lottery. She wins $20,000 per year to be paid for 10 years. The state offers her the choice of a cash settlement now instead of the annual payments for 10 years. Required: If the interest rate is 6%, what is the amount the state will offer for a settlement today? Round factors to five decimal places and final answer to the nearest cent.

Barb Muller wins the lottery. She wins $20,000 per year to be paid for 10 years. The state offers her the choice of a cash settlement now instead of the annual payments for 10 years. Required: If the interest rate is 6%, what is the amount the state will offer for a settlement today? Round factors to five decimal places and final answer to the nearest cent.

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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Assume that you just inherited an annuity that will pay you $10,000 per year for 10 years, with the first payment being made today. A friend of your mother offers to give you $60,000 for the annuity. If you sell it, what rate of return would your mother’s friend earn on his investment? If you think a “fair” return would be 6%, how much should you ask for the annuity? What keys do I need to enter in a financial calculator to get the answers of (13.70%, $78,016.92)/ only show me the keys to enter in a financial calculaotr. not excel and not algebra
Suppose you just won the state lottery, and you have two options: (1) receiving $2,550,000 now or (2) receiving a 20-year annuity with $250,000 payment at the end of each year. What rate of return is built into the annuity to make you indifferent with these two options? A) 7.12% B) 7.87% C) 8.26% D) 7.49% E) 8.67%
To save for a down payment on a home, suppose you decide to invest in an annuity that pays 7.0% annual interest, compounded annually. If you contribute $8,000 every year for 5 years, how much interest would you earn during the 5years? Enter your answer, rounded to the nearest cent, without the dollar sign or comma ($21,678.1235 should be entered as 21678.12.)
Assume you won the state lottery and you are entitled to $5,000,000. If you choose not to take the money right away but wish to be paid weekly, you estimate that you will want to receive this cash flow over the next 10 years. How much will your weekly payment be at an interest rate of 5% ?
An aunt gifts you with $12,000, but only after you invest it for one year. She givesyou two choices.1. Invest the entire sum at 4.2% compounded monthly.2. Invest $1000 at 7.1% each month in an annuity that pays every month.(a) What is the future value of the money invested with method 1?(b) How much interest is earned with method 1?(c) What is the future value of the money invested with method 2?(d) How much interest is earned with method 2?(e) Which method would you choose?
Can you show me how this is done? Ava Darling plans to buy a home and can deposit $1,703 per year for the next 5 years.. If the annual interest rate is 6%, how much can Ava Darling expect to have for a down payment in 5 years? Selected Answer: 65,579 Correct Answer: 9,600 ± 5
An investor wants to save money to purchase real estate. She buys an annuity with yearly payments that earn 5.1% interest, compounded annually. Payments will be made at the end of each year. Find the total value of the annuity in 16 years if each yearly payment is $719. Do not round any intermediate computations, and round your final answer to the nearest cent. If necessary, refer to the list of financial formulas.
Solve the given problem. A. Mrs. Ledesma apply for a loan for the renovation of their house. She agreed to pay P10,000 quarterly for 5 years that will start at the end of 2 years. If interest rate is 6% converted quarterly, how much is her loan? a. The type of annuity illustrated in the problem is ____________. b. The regular payment is ___________. c. The total number of payments is _________. d. Period of deferral is ________. e. The interest rate per period is ___________. f. The present value of the loan is ___________. B. Your mother plans to buy you laptop for your online class. She got an offer from Abenson of monthly installment of 1,950 monthly for 1 year and a down payment of 5,500. The payment will start at the end of 3 months. How much is the cash price of the laptop if the interest rate is 3% compounded monthly. a. The type of annuity illustrated in the problem is ____________. b. The regular payment is ___________. c. The total number of payments is _________. d. Period…
Rita wants to save money to open a tutoring center. She buys an annuity with a monthly payment of $16 that pays 3% interest, compounded monthly. Payments will be made at the end of each month. Find the total value of the annuity in 10 years. Do not round any intermediate computations, and round your final answer to the nearest cent. If necessary, refer to the list of financial formulas.
You would like to have enough money saved to receive a $90,000 per year perpetuity after retirement. The annual interest rate is 8 percent. Required: How much would you need to have saved in your retirement fund to achieve this goal? a) Assume that the perpetuity payments start on the day of your retirement. b) Assume that the perpetuity payments start one year from the date of your retirement.
Linda expects to receive P35,569.22 , 9 years from now. How much should she invests for three consecutive years (annually) starting THIS YEAR if the interest rate is 0.250? Use knowledge about ANNUITIES in solving this
Ms. H wants to save $1500 over the next two years to use as a down payment on a new car. If her bank offers her 5%interest, what monthly payment would she need to put into an ordinary annuity in order to reach her goal? Round to thenearest cent.

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