You are offered an annuity that will pay $10,000 a year for ten years (that is, ten payments), but the payments start after five years have elapsed. If you want to earn 8 percent on your funds, what is the  maximum you should pay for this annuity? Show formula and all working

Q: You may purchase an annuity that will pay you 300000 in income per year starting one year from now…

A: Given, Payment amount (PMT) = 300,000 Number of payments (n) = 22 Interest rate (i) = 4%

Q: You have decided to buy an annuity from a life insurance company that provides an annual payment of…

A: An annuity is a financial product or investment contract that provides a series of regular payments…

Q: You have set up a life annuity with a present value of $250,000. If your life expectancy at…

A: Using the PMT function in excel

Q: Suppose you inherit a perpetuity that pays $4,000 each year. Assuming the first payment will occur…

A: The given rate is APR rate i.e. annual percentage rate. The APR is with daily compounding. The EAR…

Q: dymer increase by 2% for the next year. Find the present value of this annuity if the initial…

A: The present value of annuity includes the value of annuities discounted at the rate of interest rate…

Q: Assume that you contribute $150 per month to a retirement plan for 20 years. Then you can increase…

A: Future value refers to the value an investment or cash flow is expected to grow to at a specific…

Q: To save for a down payment on a home, you invest in an annuity that pays 7.0% annual interest,…

A: The interest earned on the annuity can be calculated with the help of future value of annuity…

Q: After carefully exmaining your budget, you determine you can manage to set aside $350 per year. You…

A: Introduction: Future Value of Annuity Due: Future value: The value of an investment made today, with…

Q: You have just won the lottery and took a lump sum payout. After talking with a financial adviser you…

A: Present value of $16,000: Present value: $376,205.407024

Q: ou are offered an annuity that will pay R17,000 per year for 7 years (the first payment will be made…

A: Given: Annuity amount = R17,000 Year = 7 Discount rate = 11%

Q: Assume that you contribute $150 per month to a retirement plan for 20 years. Then you can increase…

A: Future value refers to the value an investment or cash flow is expected to grow to at a specific…

Q: Please explain how to solve this problem using the Financial Calculator buttons. Or formula a 5-year…

A: Information Provided: Semiannual payments = $6000 Period of annuity = 5 years Interest rate = 11%…

Q: How much would you be willing to pay today for an ordinary annuity that makes equal annual payments…

A: An ordinary annuity is the series of an equal payment that is paid or received at each week, month,…

Q: An investor is considering an annuity that pays $40,000 per year for four years.  1. Assuming the…

A: (answer of first 3 parts, please specify if any other part is required) We can compute the present…

Q: Suppose you will receive a payment of $80000 in 5 years at a rate of 3% lasting 10 years. Find the…

A: The solution requires the use of formulae applicable in time value of money. They are shown in steps…

Q: How much should you pay today for a 10 year annuity that will provide annual payments of $10,000?…

A: Annual payment = $10,000Interest rate = 4%Period of annuity = 10 years

Q: You are offered an annuity that will pay $10,000 a year for ten years (that is, ten payments), but…

A: Maximum you should pay for this annuity is $ 45,668/.Explanation:

Q: You invest in an ordinary annuity $3,000 annually at 7% annual interest. What is the future value of…

A: Given:  Amount = 3000 r = 7% n = 5 years

Q: You purchase a 10-year annuity that pays you \$ 30000 / v * ear . The first payment will begin in…

A:

Q: Jami Minard wants to receive an annuity of $8,000 at the beginning of each year for the next 10…

A: Annuity refers to a contract between an individual and an insurance company under which a desired…

Q: A perpetuity will make its first payment in 20 years. The first payment will be $5,000, and future…

A: Perpetuity means a series of infinite numbers of payments of the same size occurs in an equal…

Q: Your pension plan is an annuity with a guaranteed return of 5.8% per year (compounded quarterly).…

A: To solve this problem, we need to break it down into two main parts:1. Accumulation Phase (Before…

Q: An annuity offers $1,000 for 10 years. If you can earn 12 percent annually on your funds, what is…

A: Annuity Amount = $1,000 Years(n) = 10 Interest Rate(r) = 12% Present Value of Annuity =…

Q: CHAR is offered an annuity that will pay P24,000 per year for 11 years (the first payment will occur…

A: Annual payment (P) = P24,000 Period (n) = 11 Interest rate (r) = 13%

Q: You are saving for a Porsche Carrera Cabriolet, which currently sells for nearly half a million…

A: Present value is the current value of a future amount that is to be received or paid out.     Future…

Q: Suppose an annuity will pay $14,000 at the beginning of each year for the next 5 years. How much…

A: Annual payment (P) = $14,000 Interest rate (r) = 6.5% Period (n) = 5 Years

Q: If you set aside $5,000 per year (i.e., one deposit of $5,000 each year) in a Roth IRA for the next…

A: As per the facts, first contribution is done after one year so it is a case of Ordinary Annuity.…

Q: Your friend Anne is planning to invest $700 each year for four years and will earn a rate of 6…

A: Given information, Annuity Amount = $700 Time Period = 4 years  Interest rate per year = 6%

Q: Your pension plan is an annuity with a guaranteed return of 4% per year (compounded quarterly). You…

A: Formula for Calculating Future Value = PMT [(1+i)n - 1] / i Here, PMT = 1600              i    =…

Q: What is the future value​ (FV) of this​ perpetuity, given that the interest rate is 3​%?

A: The future value of an investment forecasts the expected value of an investment at a given future…

Q: Assume you are to receive a 5-year annuity with annual payments of £1,000. The first payment will be…

A: The Future Value of an Ordinary Annuity refers to the concept which gives out the compounded or…

Q: Suppose you are 30 years old and would like to retire at 60. Moreover, you would like to to have a…

A: Using excel PMT function

Q: Your friend Anne is planning to invest $500 each year for five years and will earn a rate of 5.5…

A: According to the time value of money, the money available in the present is worth more than the same…

Q: You are going to receive a payment at the end of each year for the next 12 years. If you invest each…

A: The future Value of an investment is an estimation of receiving some amount after some period of…

Q: You purchase a $10, 000 annuity with payments at the end of each year for 30 years and an effective…

A: Present value of annuity = $10000 Interest rate (r) = 4% Annuity amount (A) = $500 Additional amount…

Q: You buy an annuity that will pay you $24,000 a year for 25 years.  What is the value of this annuity…

A: Present value of annuity = Annuity amount * PVA of $1

Q: Suppose that you have good credit and can get a 30-year mortage for $100,000 at 5%. What is your…

A: A mortgage is a loan made usually for a property in which the collateral is the property itself.

Q: You are offered an annuity that will pay $4,250 per quarter for 8 years (first payment made today).…

A: Annuity worth refers to an amount required today for the fulfillment of payment of all series of…

Q: You can afford to pay $15,000 at the end of each of the next 30 years to repay a home loan. If the…

A: Present value of annuity is the current worth of future annual cash flows over a period of time at a…

Effective Interest Rate

The term interest rate can be defined as the amount that is charged by the lender as a percentage on the principal amount. Interest rate which is charged annually is known as annual percentage rate.