How much would you be willing to spend for an annuity that pays $2,500 atthe end of each year for three years, assuming you could earn 5.5% on otherLIETsimilar investments?Select one:O a. $5,494O b. $4,783O c. $6,087O d. $6,408O e.$6,745ہے

Present value = Future value * PV factor

Answered: How much would you be willing to spend…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Similar questions

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Your friend offers to pay you an annuity of $6,800 at the end of each year for 3 years in return for cash today. You could earn 5.5% on your money in other investments with equal risk. What is the most you should pay for the annuity? Select the correct answer. a. $18,349.15 b. $18,345.95 c. $18,342.75 d. $18,339.55 e. $18,336.35
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A.You just inherited some money, and a broker offers to sell you an annuity that pays $16,800 at the end of each year for 20 years. You could earn 5% on your money in other investments with equal risk. What is the most you should pay for the annuity? a. $209,365.13 b. $180,054.02 c. $255,425.46 d. $244,957.21 e. $236,582.60 B. New Business is just being formed by 10 investors, each of whom will own 10% of the business. The firm is expected to earn $1,000,000 before taxes each year. The corporate tax rate is 34% and the personal tax rate for the firm's investors is 35%. The firm does not need to retain any earnings, so all of its after-tax income will be paid out as dividends to its investors. The investors will have to pay personal taxes on whatever they receive. How much additional spendable income will each investor have if the business is organized as a partnership rather than as a corporation? a. $20,332 b. $19,006 c. $22,763…
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How much would you be willing to spend for an annuity that pays $2,500 at the end of each year for three years, assuming you could earn 5.5% on other similar investments? Select one: O a. $5,494 O b. $4,783 O c. $6,087 O d. $6,408 O e. $6,745 4