Suppose a 65-year-old person wants to purchase an annuity from an insurance company that would pay...

Suppose a 65-year-old person wants to purchase an annuity from an insurance company that would pay $21,600 per year until the end of that person’s life. The insurance company expects this person to live for 15 more years and would be willing to pay 8 percent on the annuity. How much should the insurance company ask this person to pay for the annuity?

		$175,131.62
		$188,964.27
		$154,356.29
		$184,884.74

Expert Solution

jeff jeffy answered 6 months ago

a. Suppose a 65-year-old person wants to purchase an annuity from an insurance company that would...

a. Suppose a 65-year-old person wants to purchase an annuity from an insurance company that would pay $20,600 per year until the end of that person’s life. The insurance company expects this person to live for 15 more years and would be willing to pay 8 percent on the annuity. How much should the insurance company ask this person to pay for the annuity? b. A second 65-year-old person wants the same $20,600 annuity, but this person is healthier and...

Calculating the following: Suppose a 60-year old person wants to purchase an annuity from an insurance...

Calculating the following: Suppose a 60-year old person wants to purchase an annuity from an insurance company that pay $25,000 per year until the end of that person’s life. The insurance company expects this person’s life. The insurance company expects this person to live for 20 more years and would be willing to pay 4.5 percent on the annuity. How much should the insurance company ask the person to pay for the annuity? What if the person is expected to live...

Problem 15-6 (LG 15-2) a. Suppose a 65-year-old person wants to purchase an annuity from an...

Problem 15-6 (LG 15-2) a. Suppose a 65-year-old person wants to purchase an annuity from an insurance company that would pay $22,000 per year until the end of that person’s life. The insurance company expects this person to live for 15 more years and would be willing to pay 7 percent on the annuity. How much should the insurance company ask this person to pay for the annuity? b. A second 65-year-old person wants the same $22,000 annuity, but this...

Calculate the following: (LG 15-2) a. Suppose a 60-year-old person wants to purchase an annuity from...

Calculate the following: (LG 15-2) a. Suppose a 60-year-old person wants to purchase an annuity from an insurance company that would pay $15,000 per year until the end of that person’s life. The insurance company expects this person to live for 20 more years and would be willing to pay 5 percent on the annuity. How much should the insurance company ask this person to pay for the annuity? b. A second 60-year-old person wants the same $15,000 annuity, but...

Suppose that an insurance company offers to pay you an annuity of $5,000 per year for...

Suppose that an insurance company offers to pay you an annuity of $5,000 per year for 5 years in exchange for $16,000 today. What is the return in this investment measured in percentage terms ? ( This is an ordinary annuity. Round to two decimal places. )

Anne purchased an annuity from an insurance company that promised to pay her $35,000 per year...

Anne purchased an annuity from an insurance company that promised to pay her $35,000 per year for the next ten years. Anne paid $236,250 for the annuity, and in exchange she will receive $350,000 over the term of the annuity. a. How much of the first $35,000 payment should Anne include in gross income?(Do not round intermediate calculations.) b.How much income will Anne recognize over the term of the annuity?

A 59 year-old calendar year individual taxpayer purchased an annuity from an insurance company for $100,000...

A 59 year-old calendar year individual taxpayer purchased an annuity from an insurance company for $100,000 in 2019. The terms of the annuity were that the company would pay him $5,000 a year to T for the rest of T’s life. How much income will he include in his personal income tax return as a result of receiving the $5,000 payment in 2020? _____________ In 2050? ______________

Suppose that a person earning $10,000 this year would pay $3,500 in taxes, while a person...

Suppose that a person earning $10,000 this year would pay $3,500 in taxes, while a person earning $100,000 would pay $21,000 in taxes. Based solely on this information, it appears that tax rates are... a. regressive. b. flat. c. progressive.

Taxpayer (“T”) a 59 year-old calendar year individual taxpayer purchased an annuity from an insurance company...

Taxpayer (“T”) a 59 year-old calendar year individual taxpayer purchased an annuity from an insurance company for $100,000 in 2019. The terms of the annuity were that the company would pay T $5,000 a year to T for the rest of T’s life. How much income will T include in T’s personal income tax return as a result of receiving the $5,000 payment in 2020? _____________ In 2050? ______________

you are considering the purchase of two different insurance annuities. annuity A will pay $10000 each...

you are considering the purchase of two different insurance annuities. annuity A will pay $10000 each year for eight years. annuity B will pay $8000 per year for 12 years. assuming your money is worth 10% and that each cost the same to purchase today, which annuity would you prefer?

Question