(Rela heckpoint Present value of an ordinary annuity) Nicki Johnson, a sophomore mechanical engineering student, receives a call from an insurance agent who believes that Nicki is an woman who is ready to retire from teaching. He talks to her about several annuities that she could buy that would guarantee her a fixed annual income. The annuities are as follows Purchase Price of the Annuity Annuity (At t=0) $40,000 B $60,000 C $60,000 (Click on the icon in order to copy its contents into a spreadsheet) Amount of Money Received Per Year $6,500 $9,000 $8,000 Duration of the Annuity (Years) 15 18 20 Nicki could earn 11 percent on her money by placing it in a savings account. Alternatively, she could place it in any of the above annuities. Which annuities in the table above, if any, will earn Nicki a highe than investing in the savings account earning 11 percent? a. If Nicki could earn 11 percent on her money, what is the present value of annuity A with $6,500 payments per year and 15 years duration? (Round to the nearest cent.)

(Rela heckpoint Present value of an ordinary annuity) Nicki Johnson, a sophomore mechanical engineering student, receives a call from an insurance agent who believes that Nicki is an woman who is ready to retire from teaching. He talks to her about several annuities that she could buy that would guarantee her a fixed annual income. The annuities are as follows Purchase Price of the Annuity Annuity (At t=0) $40,000 B $60,000 C $60,000 (Click on the icon in order to copy its contents into a spreadsheet) Amount of Money Received Per Year $6,500 $9,000 $8,000 Duration of the Annuity (Years) 15 18 20 Nicki could earn 11 percent on her money by placing it in a savings account. Alternatively, she could place it in any of the above annuities. Which annuities in the table above, if any, will earn Nicki a highe than investing in the savings account earning 11 percent? a. If Nicki could earn 11 percent on her money, what is the present value of annuity A with $6,500 payments per year and 15 years duration? (Round to the nearest cent.)

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications

Section: Chapter Questions

Problem 15E

See similar textbooks

Similar questions

Calculating the present value of an ordinary annuity) (Related to Checkpoint 6.2) Nicki Johnson, a sophomore mechanical engineering student, received a call from an insurance agent who believes that Nicki is an older woman who is ready to retire from teaching. He talks to her about several annuities that she could buy that would guarantee her a fixed annual income. The annuities are as follows: Annuity Purchase Price of the Annuity Amount of Money Received per Year Duration of the Annuity (years) A $50,000 $8,500 12 B $60,000 $7,000 25 C $70,000 $8,000 20 Nicki could earn 11 percent on her money by placing it in a savings account. Alternatively, she could place it in any of the above annuities. Which annuities in the table above, if any, will earn Nicki a higher return than investing in the savings account earning 11 percent?
Marie bought a laboratory equipment with P25,000 down payment plus 18 moths monthly payment of P2,500 each. If interest was computed at 9% compounded monthly,how much was the cash value if the first installment payment was made at the end of 6 moths? What kind of annuity is described in the problem? A.Annuity Due B.Ordinary annuity C.deferred annuity D.General annuity What is the answer to the question of the problem? A.P24,494.40 B.P49,494.40 C.P82,179.92. D.P90,500
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.)
A computer chip designer purchased a car for $59,476.47, which includes sales tax and registration. The designer obtains a 5-year loan for the total amount at an annual interest rate of 6.3% compounded monthly. The designer will make monthly payments. The payments calculation for this type of loan uses the formula for the present value of which type of annuity? Given the formula for the payment amount of annuity where PMT is the payment amount in dollars, PV is the present value in dollars, n is the number of payments, and i is the interest rate per period. PMT= ? Determin the following values. PV= $ n= i= What is the designer’s monthly payment? (Round your answer to the nearest cent.)
Determine whether or not the following situation describes an annuity. If it is an annuity, determine whether the jackpot amount is the annuity's present value or future value. Also, determine whether it is an ordinary annuity or an annuity due.Sam won a lottery jackpot which will pay him $2250 every week for 20 years, starting immediately. Group of answer choices The situation describes a future value of an ordinary annuity. The situation describes a present value of an annuity due. The situation does NOT describe an annuity. The situation describes a future value of an annuity due. The situation describes a present value of an ordinary annuity.
Suppose you just won the state lottery, and you have a choice between receiving $4,500,000 today or a 20-year annuity of $250,000, with the first payment coming one year from today. What rate of return is built into the annuity? Disregard taxes. a. 1.03% b. 0.13% c. -0.77% d. 2.83% e. 1.93%
Your uncle is about to retire, and he wants to buy an annuity that will provide him with $5,300 of income a year for 12 years, with the first payment coming immediately. The going rate on such annuities is 5.25%. How much would it cost him to buy the annuity today?Round your answer to two decimal places. For example, if your answer is $345.667 round as 345.67 and if your answer is .05718 or 5.718% round as 5.72.
Your uncle is about to retire, and he wants to buy an annuity that will provide him with $5,300 of income a year for 30 years, with the first payment coming immediately. The going rate on such annuities is 5.25%. How much would it cost him to buy the annuity today?Round your answer to two decimal places. For example, if your answer is $345.667 round as 345.67 and if your answer is .05718 or 5.718% round as 5.72. A. $85,028.03 B. $83,360.81 C. $96,698.54 D. $95,031.33 E. $70,856.69
A company wants to determine how much it should pay to purchase a particular ordinary annuity today. The annuity consists of cash flows of $ 8,000 at the end of each year for 5 years. The firm requires the annuity to provide a minimum return of 10%.Calculate the amount(Means you need to calculate PV of ordinry annuity). However anlyse how the answer will change if it a annuity due.
eanne and Harold Kimura want to set up a TDA that will generate sufficient interest at maturity to meet their living expenses, which they project to be $850 per month. (Round your answers to the nearest cent.) (a) Find the amount needed at maturity to generate $850 per month interest if they can get 6 1 2 % interest compounded monthly.$ 156923.08(b) Find the monthly payment that they would have to put into an ordinary annuity to obtain the future value found in part (a) if their money earns 8 1 4 % and the term is twenty years.$
The owner of the campus cafe plans to open a secound location on a satillite campus in 6 years. She buys an annuity that pays 11.5% interest compunded annually. Round your answer to the nearest cent. a) If the payment is $3,000 a year, find the future value of the annuity in 6 years. The future annuity is 24,040.15 b) How much more interest would be earned if the owener could invest the full amount paid into the annuity in a regular compound-interest account with the same terms for 5 years?
I got the first part but am stuck on part b. Could you explain what I must do? What is the present value of a 3-year annuity of $250 if the discount rate is 6%? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Present value $ 668.25 b. What is the present value of the annuity in (a) if you have to wait 2 years instead of 1 year for the first payment? (Round your intermediate and final answers to 2 decimal places.)