Josephine is considering purchasing an annuity with a rate of return of 6% compounded semi- annually. If the annuity will pay 20 equal payments of $1000 at the beginning of every six months, followed by another 20 equal payments of $1500 at the beginning of every six months, how much should she pay for the annuity?

Josephine is considering purchasing an annuity with a rate of return of 6% compounded semi- annually. If the annuity will pay 20 equal payments of $1000 at the beginning of every six months, followed by another 20 equal payments of $1500 at the beginning of every six months, how much should she pay for the annuity?

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

Delia purchases an annuity that will pay her $10,000 per year for the next 10 years starting next year. Assuming a rate of 6%, what is the value of the annuity. Choose the closest. a) $106,000 b) $131,808 c) $159,374 d) $171,569
Amy purchases an annuity that will give her payments of R at the end of each quarter for seven years. She will receive the first of these payments in 1.5 years. If Amy paid $50,000 for this annuity and will earn a nominal rate of interest of 6% compounded quarterly,(a) write the equation of value (using the appropriate actuarial notation) for this annuity at the time of purchase. Be sure to indicate the effective rate per payment period being used.(b) find the value of R.
Jane has been offered a choice between a lump sum payment of $100,000 today or an annuity thatpays $8,000 per year for 20 years, starting one year from today. If the interest rate is 6% per year,which option should she choose?
Cheryl Wilcox is planning for her retirement, so she is setting up a payout annuity with her bank. She wishes to receive a payout of $1,200 per month for twenty years. (Round your answers to the nearest cent.) (a) How large a monthly payment must Cheryl Wilcox make if she saves for her payout annuity with an ordinary annuity, which she sets up thirty years before her retirement? (The two annuities pay the same interest rate of 8% compounded monthly.) (b) Find the total amount that Cheryl will pay into her ordinary annuity. Compare it with the total amount that she will receive from her payout annuity. Cheryl receives $ _____ more than she paid.
Suppose you wish to invest in an annuity so that you will have $120,000 at some future date for your child’s education. You call several institutions and find that the best interest rate is 5.85% compounded monthly. In addition, you wish to make $350 monthly installments, with payments made at the end of each period. If you expect to attain this goal and give your child the $120,000 by his/her 18th birthday, about how long after he/she is born do you need to start investing in the annuity? Type an explanation and/or the calculations used to arrive at your answer. Construct the payment schedule for the first 6 payments by filling in the table below: period interest cum. int. principal balance 0 1 2 3 4 5 6
Aylene is preparing for an income fund for her retirement. She wants to receive 15,000 pesos quarterly for the next 25 years starting 1 month from now. The income fund pays 10.5% compounded monthly. How much Aylene deposit now to pay for the annuity? (Show solution)
Anna purchases a retirement annuity that will pay her $2,000 at the end of every six months for the first nine years and $200 at the end of every month for the next four years. The annuity earns interest at a rate of 3.6% compounded quarterly. a. What was the purchase price of the annuity? Round to the nearest cent b. How much interest did Anna receive from the annuity? Round to the nearest cent
Kyla wants to have an annuity payment of $400, at the end of each six months. Use the appropriate formula to find how much she should deposit (in $) now at 6% interest, compounded semiannually, to yield this payment for 12 years. ( Round your answer to the nearest cent.) $
A retiree wants to purchase an annuity that will provide her with end-of-year payments for the next 30 years. She wants the first annual payment to be $15,000, and for the payments to grow by 3% each year thereafter. If she can earn 5.5% compounded annually on her investments, what is the purchase price of the annuity today
John plans to set aside money for his young daughter's college tuition. He will deposit money in an ordinary annuity that earns 2.4% interest, compounded monthly. Deposits will be made at the end of each month. How much money does he need to deposit into the annuity each month for the annuity to have a total value of $71,000 after 14 years? Do not round intermediate computations, and round your final answer to the nearest cent.
Rita desires to purchase an ordinary annuity that will pay her $4,000 a year for the next 20 years. She is expecting that the annual interest rates will be 8% over that time period. The maximum price that Rita will be willing to pay for the annuity is closest to: a. 32,000 b. 39,273 c. 40,000 d. 80,000
Kyla wants to have an annuity payment of $400, at the end of each 6 months. Use the appropriate formula to find how much she should deposit (in $) now at 6% interest, compounded semiannually, to yield the payment for 14 years. (Round your answer to the nearest cent)