Suppose you are given a choice of the following two securities: (a) an annuity that pays $10,000 at the end of each of the next 6 years Or (b) a perpetuity that pays $10,000 forever, but the first cash payment is 11 years from today. Which security do you choose if the annual interest rate is 5%? (a) an annuity that pays $10,000 at the end of each of the next 6 years (b) a perpetuity that pays $10,000 forever, but the first cash payment is 11 years from today

You are comparing two annuities. Annuity A pays $115 at the end of each year for 5 years. Annuity B pays $105 at the beginning of each year for 5 years. The rate of return on both annuities is 12 percent. Which one of the following statements is correct given this information? Annuity B has both a higher present value and a higher future value than Annuity A. O Annuity A has both a higher present value and a higher future value than Annuity B. O Annuity A has the same present value and future value as Annuity B.

You plan to make a series of deposits in an individual retirement account. You will deposit $1,000 today, $2,000 in two years, and $2,000 in five years. If you withdraw $1,500 in three years and $1,000 in seven years, assuming no withdrawal penalties and all deposits and withdrawals are done at the start of specific year, how much will you have after eight years if the interest rate is 7 percent?

You deposit $11,600 annually into a life insurance fund for the next 10 years, at which time you plan to retire. Instead of a lump sum, you wish to receive annuities for the next 20 years. What is the annual payment you expect to receive beginning in year 11 if you assume an interest rate of 8 percent for the whole time period? (Do not round Intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16)) Annuities per year over the next twenty years

An insurance company is offering to sell an annuity for $20,000 cash. In return the firm will guarantee to pay the purchaser 20 annual endof-year payments, with the first payment amounting to $1100. Subsequent payments will increase at a uniform 10% rate each year (second payment is $1210; third payment is $1331, etc.). What rate of return would someone who buys the annuity receive?

You buy an ordinary annuity today for $120,583, which promises to pay you $11,256 per year. If the interest rate is 4.29 percent, for how many years will you receive payments? Answer to 4 decimals.

Suppose today is January 1, 2024 and you are given two options: a. an annuity that pays you 1000 dollars at the end of each year until January 1, 2030 starting from now; b. a perpetuity that pays you 1000 dollars at the end of each year, but the first cash payment is at the end of year 2034. In other words, the perpetuity starts after 10 years from today. Which of the options do you choose if the long-term value of APR is 5% compounded annually? Does your answer change if the rate is 10%? Explain your solutions.

You are considering investing in a security that will pay you 2,000 in 25 years. If the appropriate discount rate is 9 percent what is the present value of this investment? Assume these investments sell for $1,103 in return for which you receive $2,000 in 25 years. What is the rate of return investors earn on this investment if they buy it for 1, 103 ?

You manage an investment fund that sells annuities. You sell a 6-year ordinary level annuity that makes monthly payments of $2,115 per month, starting next month. If interest rates are 3.46% APR (compounded monthly) what is the current price of this annuity?

Lidia deposits $800 at the END of each year for 8 years in a savings account. The account pays 12% interest, compounded annually. Lidia calculates that the future value of the ordinary annuity is $9839.75. What would be the future value if deposits are made at the BEGINNING of each period rather than the END? the options are: a. 8071.21 b. 9839.75 c. 11020.53 d. 11820.53