How much will it cost Shaun to purchase a two-level retirement annuity that will pay Dollar...

How much will it cost Shaun to purchase a two-level retirement annuity that will pay Dollar 6000 at the end of each month for the first 10 years, and Dollar 9000 per month for the next 15 years? The payments represent a rate of return to Shaun of 6 percent compounded monthly

Expert Solution

Rate of return = 6% compounded monthly

Monthly Return = 6 * 1/12 = 0.5%

Period of Receipt of $6,000 per month = 10 years *12 = 120 months

Period of Receipt of $9,000 per month = 15 years * 12 = 180 months

Cost to purchase the retirement annuity

= [$6000 * PVAF (0.5%,120)] + [$9000 * PVAF (0.5%, 121-300)]

= [$6000 * 90.07345] + [$9000 * 65.13341]

= $540,440.70 + $586,200.69

= $1,126,641.39

Month	Receipt	PVF(0.5%)	PV of Receipt
1	$6,000	0.995025	$5,970.15
2	$6,000	0.990075	$5,940.45
3	$6,000	0.985149	$5,910.89
4	$6,000	0.980248	$5,881.49
5	$6,000	0.975371	$5,852.22
6	$6,000	0.970518	$5,823.11
7	$6,000	0.96569	$5,794.14
8	$6,000	0.960885	$5,765.31
9	$6,000	0.956105	$5,736.63
10	$6,000	0.951348	$5,708.09
11	$6,000	0.946615	$5,679.69
12	$6,000	0.941905	$5,651.43
13	$6,000	0.937219	$5,623.32
14	$6,000	0.932556	$5,595.34
15	$6,000	0.927917	$5,567.50
16	$6,000	0.9233	$5,539.80
17	$6,000	0.918707	$5,512.24
18	$6,000	0.914136	$5,484.82
19	$6,000	0.909588	$5,457.53
20	$6,000	0.905063	$5,430.38
21	$6,000	0.90056	$5,403.36
22	$6,000	0.89608	$5,376.48
23	$6,000	0.891622	$5,349.73
24	$6,000	0.887186	$5,323.11
25	$6,000	0.882772	$5,296.63
26	$6,000	0.87838	$5,270.28
27	$6,000	0.87401	$5,244.06
28	$6,000	0.869662	$5,217.97
29	$6,000	0.865335	$5,192.01
30	$6,000	0.86103	$5,166.18
31	$6,000	0.856746	$5,140.48
32	$6,000	0.852484	$5,114.90
33	$6,000	0.848242	$5,089.45
34	$6,000	0.844022	$5,064.13
35	$6,000	0.839823	$5,038.94
36	$6,000	0.835645	$5,013.87
37	$6,000	0.831487	$4,988.92
38	$6,000	0.827351	$4,964.10
39	$6,000	0.823235	$4,939.41
40	$6,000	0.819139	$4,914.83
41	$6,000	0.815064	$4,890.38
42	$6,000	0.811009	$4,866.05
43	$6,000	0.806974	$4,841.84
44	$6,000	0.802959	$4,817.75
45	$6,000	0.798964	$4,793.78
46	$6,000	0.794989	$4,769.93
47	$6,000	0.791034	$4,746.20
48	$6,000	0.787098	$4,722.59
49	$6,000	0.783182	$4,699.09
50	$6,000	0.779286	$4,675.72
51	$6,000	0.775409	$4,652.45
52	$6,000	0.771551	$4,629.31
53	$6,000	0.767713	$4,606.28
54	$6,000	0.763893	$4,583.36
55	$6,000	0.760093	$4,560.56
56	$6,000	0.756311	$4,537.87
57	$6,000	0.752548	$4,515.29
58	$6,000	0.748804	$4,492.83
59	$6,000	0.745079	$4,470.47
60	$6,000	0.741372	$4,448.23
61	$6,000	0.737684	$4,426.10
62	$6,000	0.734014	$4,404.08
63	$6,000	0.730362	$4,382.17
64	$6,000	0.726728	$4,360.37
65	$6,000	0.723113	$4,338.68
66	$6,000	0.719515	$4,317.09
67	$6,000	0.715935	$4,295.61
68	$6,000	0.712374	$4,274.24
69	$6,000	0.708829	$4,252.98
70	$6,000	0.705303	$4,231.82
71	$6,000	0.701794	$4,210.76
72	$6,000	0.698302	$4,189.81
73	$6,000	0.694828	$4,168.97
74	$6,000	0.691371	$4,148.23
75	$6,000	0.687932	$4,127.59
76	$6,000	0.684509	$4,107.06
77	$6,000	0.681104	$4,086.62
78	$6,000	0.677715	$4,066.29
79	$6,000	0.674343	$4,046.06
80	$6,000	0.670988	$4,025.93
81	$6,000	0.66765	$4,005.90
82	$6,000	0.664329	$3,985.97
83	$6,000	0.661023	$3,966.14
84	$6,000	0.657735	$3,946.41
85	$6,000	0.654462	$3,926.77
86	$6,000	0.651206	$3,907.24
87	$6,000	0.647967	$3,887.80
88	$6,000	0.644743	$3,868.46
89	$6,000	0.641535	$3,849.21
90	$6,000	0.638344	$3,830.06
91	$6,000	0.635168	$3,811.01
92	$6,000	0.632008	$3,792.05
93	$6,000	0.628863	$3,773.18
94	$6,000	0.625735	$3,754.41
95	$6,000	0.622622	$3,735.73
96	$6,000	0.619524	$3,717.14
97	$6,000	0.616442	$3,698.65
98	$6,000	0.613375	$3,680.25
99	$6,000	0.610323	$3,661.94
100	$6,000	0.607287	$3,643.72
101	$6,000	0.604265	$3,625.59
102	$6,000	0.601259	$3,607.55
103	$6,000	0.598268	$3,589.61
104	$6,000	0.595291	$3,571.75
105	$6,000	0.59233	$3,553.98
106	$6,000	0.589383	$3,536.30
107	$6,000	0.586451	$3,518.70
108	$6,000	0.583533	$3,501.20
109	$6,000	0.58063	$3,483.78
110	$6,000	0.577741	$3,466.45
111	$6,000	0.574867	$3,449.20
112	$6,000	0.572007	$3,432.04
113	$6,000	0.569161	$3,414.97
114	$6,000	0.566329	$3,397.98
115	$6,000	0.563512	$3,381.07
116	$6,000	0.560708	$3,364.25
117	$6,000	0.557919	$3,347.51
118	$6,000	0.555143	$3,330.86
119	$6,000	0.552381	$3,314.29
120	$6,000	0.549633	$3,297.80
121	$9,000	0.546898	$4,922.08
122	$9,000	0.544177	$4,897.60
123	$9,000	0.54147	$4,873.23
124	$9,000	0.538776	$4,848.99
125	$9,000	0.536096	$4,824.86
126	$9,000	0.533429	$4,800.86
127	$9,000	0.530775	$4,776.97
128	$9,000	0.528134	$4,753.21
129	$9,000	0.525506	$4,729.56
130	$9,000	0.522892	$4,706.03
131	$9,000	0.520291	$4,682.61
132	$9,000	0.517702	$4,659.32
133	$9,000	0.515126	$4,636.14
134	$9,000	0.512564	$4,613.07
135	$9,000	0.510013	$4,590.12
136	$9,000	0.507476	$4,567.28
137	$9,000	0.504951	$4,544.56
138	$9,000	0.502439	$4,521.95
139	$9,000	0.499939	$4,499.46
140	$9,000	0.497452	$4,477.07
141	$9,000	0.494977	$4,454.80
142	$9,000	0.492515	$4,432.63
143	$9,000	0.490064	$4,410.58
144	$9,000	0.487626	$4,388.64
145	$9,000	0.4852	$4,366.80
146	$9,000	0.482786	$4,345.08
147	$9,000	0.480384	$4,323.46
148	$9,000	0.477994	$4,301.95
149	$9,000	0.475616	$4,280.55
150	$9,000	0.47325	$4,259.25
151	$9,000	0.470896	$4,238.06
152	$9,000	0.468553	$4,216.98
153	$9,000	0.466222	$4,196.00
154	$9,000	0.463902	$4,175.12
155	$9,000	0.461594	$4,154.35
156	$9,000	0.459298	$4,133.68
157	$9,000	0.457013	$4,113.11
158	$9,000	0.454739	$4,092.65
159	$9,000	0.452477	$4,072.29
160	$9,000	0.450226	$4,052.03
161	$9,000	0.447986	$4,031.87
162	$9,000	0.445757	$4,011.81
163	$9,000	0.443539	$3,991.85
164	$9,000	0.441332	$3,971.99
165	$9,000	0.439137	$3,952.23
166	$9,000	0.436952	$3,932.57
167	$9,000	0.434778	$3,913.00
168	$9,000	0.432615	$3,893.54
169	$9,000	0.430463	$3,874.16
170	$9,000	0.428321	$3,854.89
171	$9,000	0.42619	$3,835.71
172	$9,000	0.42407	$3,816.63
173	$9,000	0.42196	$3,797.64
174	$9,000	0.419861	$3,778.75
175	$9,000	0.417772	$3,759.95
176	$9,000	0.415693	$3,741.24
177	$9,000	0.413625	$3,722.63
178	$9,000	0.411567	$3,704.11
179	$9,000	0.40952	$3,685.68
180	$9,000	0.407482	$3,667.34
181	$9,000	0.405455	$3,649.10
182	$9,000	0.403438	$3,630.94
183	$9,000	0.401431	$3,612.88
184	$9,000	0.399434	$3,594.90
185	$9,000	0.397446	$3,577.02
186	$9,000	0.395469	$3,559.22
187	$9,000	0.393502	$3,541.51
188	$9,000	0.391544	$3,523.89
189	$9,000	0.389596	$3,506.36
190	$9,000	0.387658	$3,488.92
191	$9,000	0.385729	$3,471.56
192	$9,000	0.38381	$3,454.29
193	$9,000	0.3819	$3,437.10
194	$9,000	0.38	$3,420.00
195	$9,000	0.37811	$3,402.99
196	$9,000	0.376229	$3,386.06
197	$9,000	0.374357	$3,369.21
198	$9,000	0.372494	$3,352.45
199	$9,000	0.370641	$3,335.77
200	$9,000	0.368797	$3,319.18
201	$9,000	0.366962	$3,302.66
202	$9,000	0.365137	$3,286.23
203	$9,000	0.36332	$3,269.88
204	$9,000	0.361513	$3,253.61
205	$9,000	0.359714	$3,237.43
206	$9,000	0.357924	$3,221.32
207	$9,000	0.356144	$3,205.29
208	$9,000	0.354372	$3,189.35
209	$9,000	0.352609	$3,173.48
210	$9,000	0.350854	$3,157.69
211	$9,000	0.349109	$3,141.98
212	$9,000	0.347372	$3,126.35
213	$9,000	0.345644	$3,110.79
214	$9,000	0.343924	$3,095.32
215	$9,000	0.342213	$3,079.92
216	$9,000	0.340511	$3,064.60
217	$9,000	0.338817	$3,049.35
218	$9,000	0.337131	$3,034.18
219	$9,000	0.335454	$3,019.08
220	$9,000	0.333785	$3,004.06
221	$9,000	0.332124	$2,989.12
222	$9,000	0.330472	$2,974.25
223	$9,000	0.328828	$2,959.45
224	$9,000	0.327192	$2,944.72
225	$9,000	0.325564	$2,930.07
226	$9,000	0.323944	$2,915.50
227	$9,000	0.322332	$2,900.99
228	$9,000	0.320729	$2,886.56
229	$9,000	0.319133	$2,872.20
230	$9,000	0.317545	$2,857.91
231	$9,000	0.315966	$2,843.69
232	$9,000	0.314394	$2,829.54
233	$9,000	0.312829	$2,815.46
234	$9,000	0.311273	$2,801.46
235	$9,000	0.309724	$2,787.52
236	$9,000	0.308184	$2,773.65
237	$9,000	0.30665	$2,759.85
238	$9,000	0.305125	$2,746.12
239	$9,000	0.303607	$2,732.46
240	$9,000	0.302096	$2,718.87
241	$9,000	0.300593	$2,705.34
242	$9,000	0.299098	$2,691.88
243	$9,000	0.29761	$2,678.49
244	$9,000	0.296129	$2,665.16
245	$9,000	0.294656	$2,651.90
246	$9,000	0.29319	$2,638.71
247	$9,000	0.291731	$2,625.58
248	$9,000	0.29028	$2,612.52
249	$9,000	0.288836	$2,599.52
250	$9,000	0.287399	$2,586.59
251	$9,000	0.285969	$2,573.72
252	$9,000	0.284546	$2,560.91
253	$9,000	0.28313	$2,548.17
254	$9,000	0.281722	$2,535.50
255	$9,000	0.28032	$2,522.88
256	$9,000	0.278925	$2,510.33
257	$9,000	0.277538	$2,497.84
258	$9,000	0.276157	$2,485.41
259	$9,000	0.274783	$2,473.05
260	$9,000	0.273416	$2,460.74
261	$9,000	0.272056	$2,448.50
262	$9,000	0.270702	$2,436.32
263	$9,000	0.269355	$2,424.20
264	$9,000	0.268015	$2,412.14
265	$9,000	0.266682	$2,400.14
266	$9,000	0.265355	$2,388.20
267	$9,000	0.264035	$2,376.32
268	$9,000	0.262721	$2,364.49
269	$9,000	0.261414	$2,352.73
270	$9,000	0.260114	$2,341.02
271	$9,000	0.25882	$2,329.38
272	$9,000	0.257532	$2,317.79
273	$9,000	0.256251	$2,306.26
274	$9,000	0.254976	$2,294.78
275	$9,000	0.253707	$2,283.37
276	$9,000	0.252445	$2,272.01
277	$9,000	0.251189	$2,260.70
278	$9,000	0.249939	$2,249.46
279	$9,000	0.248696	$2,238.26
280	$9,000	0.247459	$2,227.13
281	$9,000	0.246228	$2,216.05
282	$9,000	0.245003	$2,205.02
283	$9,000	0.243784	$2,194.05
284	$9,000	0.242571	$2,183.14
285	$9,000	0.241364	$2,172.28
286	$9,000	0.240163	$2,161.47
287	$9,000	0.238968	$2,150.71
288	$9,000	0.237779	$2,140.01
289	$9,000	0.236596	$2,129.37
290	$9,000	0.235419	$2,118.77
291	$9,000	0.234248	$2,108.23
292	$9,000	0.233083	$2,097.74
293	$9,000	0.231923	$2,087.31
294	$9,000	0.230769	$2,076.92
295	$9,000	0.229621	$2,066.59
296	$9,000	0.228479	$2,056.31
297	$9,000	0.227342	$2,046.08
298	$9,000	0.226211	$2,035.90
299	$9,000	0.225086	$2,025.77
300	$9,000	0.223966	$2,015.69
		155.2069	$1,126,641.42
	PVAF(121-300)	65.13341
	PVAF(0-120)	90.07345

ekkarill92 answered 2 years ago

(Amount of an ordinary annuity) How much must you pay at the end of each year...

(Amount of an ordinary annuity) How much must you pay at the end of each year to repay a $50,000, 14% annual interest rate loan if you must make: Using excel a. 10 payments? b. 15 payments? c. 20 payments? d. 30 payments?

How much would you be willing to pay for a 10-year ordinary annuity if the payments...

How much would you be willing to pay for a 10-year ordinary annuity if the payments are $500 per year and the interest rate is 6.25% compounded annually ?

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?

Since the PE ratio measures how much investors are willing to pay per dollar of current...

Since the PE ratio measures how much investors are willing to pay per dollar of current earnings, lower PEs are often taken to mean that the firm has significant prospects for future growth. （4.0分）

Lucy purchases a retirement annuity that will pay her $2,000 at the end of every six...

Lucy purchases a retirement annuity that will pay her $2,000 at the end of every six months for the first twelve years and $800 at the end of every month for the next seven years. The annuity earns interest at a rate of 3.1% compounded quarterly. a. What was the purchase price of the annuity? Round to the nearest cent b. How much interest did Lucy receive from the annuity? Round to the nearest cent

olly purchases a retirement annuity that will pay her $2,500 at the end of every six...

olly purchases a retirement annuity that will pay her $2,500 at the end of every six months for the first twelve years and $300 at the end of every month for the next five years. The annuity earns interest at a rate of 4.3% compounded quarterly. a. What was the purchase price of the annuity? Round to the nearest cent b. How much interest did Holly receive from the annuity? Round to the nearest cent

Background: How much do we purchase and how do we pay for these purchases? According to...

Background: How much do we purchase and how do we pay for these purchases? According to recent data from US Bureau of Economic Analysis, U.S. consumer spending (personal consumption expenditures) rose to over $14 trillion from June 2018 to June 2019. This includes spending on all categories, ranging from cars and furniture to clothing and health care. At the same time, the Federal Reserve reports that total household debt has increased to approximately $13.67 trillion. This includes housing debt, student...

Abigail wishes to purchase an annuity which will pay her $2250 at the end of each...

Abigail wishes to purchase an annuity which will pay her $2250 at the end of each month for 10 years. The rate of interest on the annuity is 6% compounded monthly. Find the present value of this cash flow.

How much are you going to pay? How much insurance company pays?

Use the following information to answer the following questions deductible: $1000 coinsurance: 20% out-of-pocket maximum: $8000 let's say you have $30000 in covered medical expenses in January: How much are you going to pay? How much insurance company pays? if you have an additional $20000 in medical expenses: how much are you going to pay? how much insurance company pays?

How much of the tax do consumer pay?

Question