No more payment is required after the seventh birthday. The policy will pay Anna's child $300,000 on her child's 60th birthday. If the relevant interest rate is 10% per year and Anna's child will live to 60 years old, is this policy worth buying? Why?
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- A couple wants to begin saving money for their daughter's education. $16,000 will be needed on the child’s 18th birthday, $18,000 on the 19th birthday, $20,000 on the 20th birthday, and $22,000 on the 21st birthday. Assume 5% interest with annual compounding. The couple is considering two methods of accumulating the money. a. How much money would have to be deposited into the account on the child's first birthday to accumulate enough money to cover the education expenses? (Note: A child’s “first birthday” is celebrated 1 year after the child is born.) b. What uniform annual amount would the couple have to deposit each year on the child’s first through seventeenth birthdays to accumulate enough money to cover the education expenses?3. Congratulations! Your first baby was born yesterday and is healthy and strong. To guard against your premature death, you want to purchase a life insurance policy that will replace $58,000 of your annual income until your child is 20 years old. How much life insurance should you purchase, if you assume a 3% inflation rate? (Do NOT worry about Social Security or home production value for this example) 4. What formula did you use?6. Adrianna wants to provide retirement income for her dependent parents for 23 years should she die. Adriana earns $67,500 and feels that her parents could live on 70% of that amount. If the insurance funds could be invested at 5.5%, how much life insurance does Adrianna purchase using the desired income method? O $714,666.67 $618,666.67 $859,090.91 $1,546,667.84
- \\nAssume you have established a trust account for your child, which she will have access to once she reaches the age of 25. This daughter just turned 24 today, so the first payment will occur at the end of this year, upon her 25th birthday. Under the terms of the trust agreement, she will receive $10,000 upon her 25th birthday, $20,000 upon her 26th birthday, $30,000 on her 27th birthday, and $50,000 on her 28th birthday. If she puts all of these payments into savings, and she can earn a rate of 5%, how much will she have in total on her 28th birthday? Calculate the FV of these cash flows at the end of year 4 (her 28th birthday).\\nDarlene wants to buy a $200,000 term life insurance policy. She is 34 years old. Using the premium table, what is her annual premium for a 10-year policy? a $100 b. $108 C$1.202 d. $1.290Christina will receive a 5-year annuity of $1,200 a year, with the first payment occurring at Date 4. What is the value of this annuity to her today at a discount rate of 7.25 percent? A. $4,111.08 B. $4,209.19 C. $4.774.04 D. $3,961.80 E. $4,887.48 The answer given is E, however, mine is D. Could you help me to explain this question?
- The parents of a newborn decide to make deposits into an educational savingsaccount on each of their daughter's birthdays, starting with her first birthday.Assume that the educational savings account will return a constant 5.5% per year.The parents plan to deposit $2 200 on every of their daughter's future birthdays.How much money could they alternatively deposit on their daughter's birth date(today) to have the same amount available on her 18th birthday?Which of the following choices is considered as an annuity? Explain. a. Niall gets $10 this year and $20 next b. Rexha gets $10 in 3 months and $10 6 months later c. Taylor gets $50 in 6 months and $20 6 months later d. Nina gets $100 every year for the rest of her lifeGrandparents plan to open an account on their grandchild's birthday and contribute each month until she goes to college. How much must they contribute at the beginning of each month in an investment that pays 7%, compounded monthly, if they want the balance to be $200,000 at the end of 18 years? (a) State whether the problem relates to an ordinary annuity or an annuity due. ordinary annuity annuity due (b) Solve the problem. (Round your answer to the nearest cent.)
- When your son is born you want to determine what lump amount would you have to be paid into an account bearing interest of 10%/yr to provide withdrawals of $10,000 on each of your son's 18th, 19th, 20th, and 21st birthday5. Understanding term life insurance Deborah is a 25-year-old female with limited financial resources and a four-year-old son. Ideally, she would like to purchase permanent insurance coverage, but her primary concern is making sure her son will be taken care of financially if she dies before he graduates from college. Given her current financial situation, she is interested in a term life insurance policy that will last 20 years. Deborah goes to an insurance broker to purchase a policy and is shown the following two rate tables to help her choose between annual renewable and level premium term life insurance. Yearly Rates on Term Life Insurance Policies Annual Renewable Term Life Rates Policy Year Age 25 Age 40 Age 60 1 $119 $139 $252 5 $147 $219 $562 15 $176 $507 $1,313 20 $259 $1,054 $2,989 Total Cost 5 Years: $625 $897 $2,100 Total Cost 15 Years: $2,135 $6,205 $11,987 Total Cost 20 Years: $3,777 $8,287 $22,346 Level Premium…You are planning on having your first child next month and your parents have told you that they are going to open an account with $3,000 on the day your child is born. The money is to be used for college. You plan to also put $1,500 of your own money into the same account on the day your child is born, and then another $1,500 into the account each year on your child's birthday, through his/her 18th birthday. If the account averages an 8% annual return, what will the account balance be on your child's 18th birthday? Please use appropriate excel formula and show how you arrived at your answer.