Your financial planner offers you two different investment plans. Plan X is a $22,000 annual perpetuity. Plan Y is an annuity lasting 20 years and an annual payment, $30,000. Both plans will make their first payment one year from today. At what discount rate would you be indifferent between these two plans

Q: Suppose today is January 1, 2024 and you are given two options: a. an annuity that pays you 1000…

A: Present value is the estimation of the current value of future cash value which is likely to be…

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: A company wants to determine how much it should pay to purchase a particular ordinary annuity today.…

A: Formula for finding PV  PV=Payment per month*[{1-{1+interest rate)^(-Time period)}}/interest rate]…

Q: Use the formula for the value of an annuity to solve:To save for retirement, you decide to deposit…

A: The future value of the annuity is the total value of all the payments which occurred regularly at a…

Q: Suppose you just won the state lottery, and you have a choice between receiving $2,825,000 today or…

A: Present value = pv = $2,825,000 Time = nper = 20 years Payment = pmt = $240,000

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: To find the value of an annuity due, you will multiply the value of the ordinary annuity by…

A: Present value is the current worth of the future payments that are to be received. As per time value…

Q: You are currently at time period 0, and you will receive the first payment on an annual payment…

A: Annuity is the series of equal cash payments over the period.

Q: Your friend offers to pay you an annuity of $2,500 at the end of each year for 3 years in return for…

A: Annual Payment (P) = $2,500Interest rate (r) = 5.5% or 0.055Number of years (n) = 3

Q: Your investment advisor wants you to purchase an annuity that will pay you $81,491 after 10 years.…

A: The present value of an annuity refers to the value of the future payments on the current date…

Q: per year and the cash value is expected to be $1.5 million at retirement. Approximately how many…

A: The given problem can be solved using NPER function in excel. NPER function computes no. of years/…

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: A new investment opportunity for you is an annuity that pays $800 at the beginning of each year for…

A: Beginning of period Annuity Annuity Amount = 800 Time Period (N) = 3 years Rate = 5.5%

Q: you just won the state lottery, and you have a choice between receiving $2,625,000 today or a…

A: Rate of return inbuilt in annuity is rate at which present value of annuity is equals to amount of…

Q: You have a chance to buy an annuity that pays $50,000 at the beginning of each year for 15 years.…

A: Present value means today’s value of money you expect to receive or pay in future.   PV = PMT…

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: A retirement plan provides its enrollees with two options. Option 1 provides participants with…

A: A discount factor is a monetary concept that is used to calculate the present value of cash flows or…

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

A:

Q: What will be the value in your account at the end of Year 30?

A: Future Value of Annuity: It represents the future worth of the annuity payments made for a given…

Q: You are considering purchasing an annuity that would pay you $1,000 per year for 10 years. The…

A: Formula to find the present worth of annuity:- P= Amount (P/A,Rate%,time)

Q: what is the value today of Social Security's promise?

A: Social security is the amount which is given by certain employers in addition to salary that gets…

Q: a) You deposit $200 monthly into an annuity with the goal of accumulating $180,000 after 30 years.…

A: “Since you have posted multiple questions, we will provide the solution only to the first question…

Q: Your friend offers to pay you an annuity of $7,700 at the end of each year for 3 years in return for…

A: Cash flow, C = $7700              No. of periods, n = 3 rate of interest, i = 5.5%

Q: You are looking at two investment options, A and B. Investment A is a 13-year annuity that needs an…

A: Compounding refers to the ability of an investment to generate earnings, which are then reinvested…

Q: Assume that Social Security promises you $34,000 per year starting when you retire 45 years from…

A: We have to find the PV of an annuity immediate, starting 45 years from today. All the relevant…

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: After consulting with your financial advisor, you figured that you need $100,000 per year for your…

A: An annuity is a series of constant payment of a sum, yielding a certain rate of return.Information…

Q: ancial planner offers you two different investment plans. Plan X is an annual perpetuity of $12,000…

A: Perpetuity is annuity where there are payments forever and payment continue forever and other…

Q: Suppose you have an opportunity to buy an annuity that pays $3,500 at the end of each year for 6…

A: Present Value of Annuity=Annuity×1-11+ratetimerate

Q: You are evaluating a growing perpetuity product from a large financial services firm. The product…

A: here is the formula for calculating the present value of growing perpetuity PV = A/(r-g) where…

Q: You have the following choice:  You can receive $1,000 today or $1,100 in one year.  The annual…

A: Option 1- Receive $1000 today Option 2 - Receive $1100 in one year

Q: You are looking to invest your savings and want to earn a 10% annualized return. You can choose from…

A: The idea of present value, in finance, is to determine the worth of future cash flows or a series 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: Your insurance agent is trying to sell you an annuity that costs $55,000 today. By buying this…

A: Compound = Monthly = 12Present Value of Payment = $55,000Monthly Payment = $285Number of Payment =…

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.