Professor's Annuity Corporation offers a lifetime annuity to retiring professors. For a payment of $87,000 at age 65, the firm will pay the retiring professor $775 a month until his death. a. If the professor's remaining life expectancy is 15 years, what is the monthly interest rate on this annuity? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. b. What is the effective annual interest rate? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. c. If the monthly interest rate is 0.75%, what monthly annuity payment can the firm offer to the retiring professor? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. a. Monthly rate on annuity b. Effective annual rate c. Monthly annuity payment % %

Professor's Annuity Corporation offers a lifetime annuity to retiring professors. For a payment of $87,000 at age 65, the firm will pay the retiring professor $775 a month until his death. a. If the professor's remaining life expectancy is 15 years, what is the monthly interest rate on this annuity? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. b. What is the effective annual interest rate? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. c. If the monthly interest rate is 0.75%, what monthly annuity payment can the firm offer to the retiring professor? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. a. Monthly rate on annuity b. Effective annual rate c. Monthly annuity payment % %

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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A perpetuity of $1 each year, with the first payment due immediately, has a present value of $25 at an annual effective rate of i%. The owner exchanges it for another perpetuity with the first payment due immediately and subsequent payments due at two year intervals. What should the payment of the second perpetuity be, in order to keep the same interest rate, i%, and the same present value? A B с D E Less than $1.90 At least $1.90, but less than $1.94 At least $1.94, but less than $1.98 At least $1.98, but less than $2.02 $2.02 or more
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> An ordinary annuity that earns 7.3% compounded monthly has a current balance of $600,000. The owner of the account is about to retire and has to decide how much to withdraw from the account each month. Find the number of withdrawals under each of the following options. (A) $5000 monthly (B) $4000 monthly (C) $3000 monthly (A) Select the correct choice below, and, if necessary, fill in the answer box t OA. The total number of withdrawals of $5000 will be OB. The withdrawals of $5000 continue forever. Help me solve this View an example complete your choice. Get more help. Clear all Check answer rect: 0
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