Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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- You have a chance to buy an annuity that pays Php2,500 at the end of each year for 3 years. You could earn 5.5% on your money in other investments with equal risk. What is the most you should pay for the annuity? SHOW MANUAL SOLVINGarrow_forwardf. Find the PV of an ordinary annuity that pays $1,000 each of the next 4 years if the interest rate is 15%. Then find the FV of that same annuity. Round your answers to the nearest cent. PV of ordinary annuity: $ FV of ordinary annuity: $ g. How will the PV and FV of the annuity in part f change if it is an annuity due rather than an ordinary annuity? Round your answers to the nearest cent. PV of annuity due: $ FV of annuity due: $arrow_forwardAfter consulting with your financial advisor, you figured that you need $100,000 per year for your living during 35 years of the retirement period. You consider buying an annuity contract that will pay $100,000 at the end of every year. Assuming a rate of return of 8%, how much do you need today to buy the ordinary annuity contract? O $1,455,457 O $1,165,980 O $1,165,457 $1,133,457arrow_forward
- Not use excelarrow_forwardConsider a growing perpetuity that will pay $100 in one year. Each year after that, you will receive a payment on the anniversary of the last payment that is 6% larger than the last payment. This pattern of payments will continue forever. If the interest rate is 11%, then the value of this perpetuity is closest to: Group of answer choices $1,667 $588 $2000 $909arrow_forward1. you have a chance to buy an annuity that pays $1,000 at the end of each year for 5 years. You could earn 6% on your money in other investments with equal risk. What is the most you should pay for the annuity?arrow_forward
- Retirement Problem You plan to retire in 30 years. You will receive an inheritance of $200,000 in 25 years. You think you will want $50,000 per year when you retire for 30 years (the first withdrawal will come one year after you retire). You will begin saving an amount to meet your retirement goals one year from today. Required: If you think you can make 9 percent on your investments, how much will you need to save each year for the next 30 years to meet your retirement goals? PV of $500,000 gift (to be given in 50 years) in 30 years = $89,215.44 PV of annuity of $50,000 in 30 years to be received from the age of 60 = 2165.49arrow_forwardYou are opening an investment account that will earn 6.5% compounded annually. You will invest $1,000 one year from today, $800 two years from today, and 1,200 three years from today. What will the value of your account be 4 years from today? Question 3 options: 3,518 3.586 3,242 3,422 3,393arrow_forwardYou hope to have $35,000 in your investment account in ten years. If you invest $25,000 today, what annual rate of return would your investment account need to generate if you make no future deposits? Group of answer choices 3.4% 3.8% 40.0% 1.7%arrow_forward
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