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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Professor’s Annuity Corp. offers a lifetime annuity to retiring professors. For a payment of $81,000 at age 65, the firm will pay the retiring professor $625 a month until death. a. If the professor’s remaining life expectancy is 15 years, what is the monthly interest rate on this annuity? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) b. What is the effective annual interest rate? (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? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Professor’s Annuity Corporation offers a lifetime annuity to retiring professors. For a payment of $78,000 at age 65, the firm will pay the retiring professor $550 a month until his death. If the professor’s remaining life expectancy is 20 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. What is the effective annual interest rate? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. If the monthly interest rate is 0.50%, 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. Don't use Excel
Professor's Annuity Corp. offers a lifetime annuity to retiring professors. For a lump payment today of $59,470.17, the firm will pay the retiring professor $9,200 per year for 25 years. What is the interest rate on the annuity? (Do not round intermediate calculations. Round your answer to 2 decimal places.) %
Professor's Annuity Corp. offers a lifetime annuity to retiring professors. For a lump payment today of $96,530.82, the firm will pay the retiring professor a set amount of money per year for 15 years. If the interest rate on the annuity is 5%, then what are the annual payments? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
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Professor’s Annuity Corp. offers a lifetime annuity to retiring professors. For a payment of $76,000 at age 65, the firm will pay the retiring professor $500 a month until death. a. If the professor’s remaining life expectancy is 20 years, what is the monthly interest rate on this annuity? b. What is the effective annual interest rate? c. If the monthly interest rate is 1.00%, what monthly annuity payment can the firm offer to the retiring professor?
13. Professor's Annuity Corp. offers a lifetime annuity to retiring professors. For a payment of $80,000 at age 65, the firm will pay the retiring professor $600 a month until death. a. If the professor's remaining life expectancy is 20 years, what is the monthly rate on this annuity? (Round your answer to 4 decimal places.) The monthly rate on the annuity % What is the effective annual rate? (Round your answer to 3 decimal places.) The effective annual rate % What is the APR? (Round your answer to 4 decimal places.) APR % b. If the monthly interest rate is .5%, what monthly annuity payment can the firm offer to the retiring professor? (Round your answer to the nearest cent.) PMT $
Suppose a friend tells you about an annuity that pays 6% annual interest, compounded semi-annually. You invest in the annuity contributing $10,000 semiannually for 6 years. What is the value of the annuity after your last investment? Enter your answer rounded to the nearest hundred dollars and omit the dollar sign and comma (For example, $42,570.21should be entered as 42600.)
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Suppose you invest in an annuity that pays 6% interest, compounded annually. You contribute $4,500 each year for 10 years, what is the value of the annuity at the end of 10 years? Enter your answer rounded to the nearest hundred dollars. Omit the dollar sign and comma ($42,570.21 should be entered as 42600.)
What is the present value of a 3-year annuity of $120 if the discount rate is 7%? (Do not round intermediate calculations. Round your answer to 2 decimal places.) What is the present value of the annuity in (a) if you have to wait an additional year for the first payment? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

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