Question
In: Finance
$10,000 is used to purchase an appropriate size annuity that has level annual payments for 15...
| $10,000 is used to purchase an appropriate size annuity that
has level annual payments for 15 years. The price of the annuity is
based on an effective annual rate of 12%. As each payment is
received, it is put into a fund that earns an effective annual rate
of 6.4%. |
| (a) | Determine the accumulated value of the investment at the end of 15 years. |
| (b) | If the $10,000 were put into a fund that was to produce the same final value after 15 years, what annual effective rate would that fund have to offer? |
Solutions
Expert Solution
Please refer to below spreadsheet for calculation and answer. Cell reference also provided.
Cell reference -
jeff jeffy answered 2 days agoRelated Solutions
James has a loan of 10,000, which is to be repaid with 10 level annual payments...
James has a loan of 10,000, which is to be repaid with 10 level
annual payments at an annual effective interest rate of 14.5%.
Calculate the Macaulay duration of the loan using the 14.5%
interest rate.
James has a loan of 10,000, which is to be repaid with 10 level annual payments...
James has a loan of 10,000, which is to be repaid with 10 level
annual payments at an annual effective interest rate of 14.5%.
Calculate the Macaulay duration of the loan using the 14.5%
interest rate.
You are offered a 12-year annuity of $10,000 annual payments. However, the annuity begins in 8...
You are offered a 12-year annuity of $10,000 annual payments.
However, the annuity begins in 8 years (you will not receive any
payments for 8 years, but will then receive $10,000 at the end of
each year for 12 years. If the discount rate is 5% per year
(compounded annually), what is the current value of the
annuity?
You are offered a 18-year annuity of $10,000 annual payments. However, the annuity begins in 7...
You are offered a 18-year annuity of $10,000 annual
payments.
However, the annuity begins in 7 years (you will not receive any
payments for 7 years, but will then receive $10,000 at the end of
each year for 18 years. If the discount rate is 6% per year
(compounded annually), what is the current value of the
annuity?
You purchase a 10 year annuity with payments at the end of each year for $10,000
You purchase a 10 year annuity with payments at the end of
each year for $10,000 (where for this annuity effective annual
interest is 4%). Immediately after you receive payments, you
deposit the payment into an account earning 5% effective annual
interest. How much is in this account at the end of 10 years? Use
this to find the equivalent effective annual interest rate for this
$10, 000 investment over this 10 year period.
You purchase a 10 year annuity with payments at the end of each year for $10,000...
You
purchase a 10 year annuity with payments at the end of each year
for $10,000 (where for this annuity effective annual interest is
4%). Immediately after you receive payments, you deposit the
payment into an account earning 5% effective annual interest. How
much is in this account at the end of 10 years? Use this to find
the equivalent effective annual interest rate for this $10, 000
investment over this 10 year period. please answer all parts of the...
Consider a level annuity-due with annual payments, and an annual interest rate of 6%. The value...
Consider a level annuity-due with annual payments, and an annual
interest rate of 6%. The value of the annuity-due, on the day of
its first payment, is $5,231.50. Using the same interest rate, the
value of this annuity on the day of its last payment, is
$16,778.13. Find the number of payments and the amount of the level
payment for this annuity.
If you have an annuity due that pays $10,000 annual payments for 10 years starting today,...
If you have an annuity due that pays $10,000 annual payments for
10 years starting today, what is it worth right now if it is
discounted at 10%?
John has taken out a $10,000 loan, which is being repaid with 30 level annual payments....
John has taken out a $10,000 loan, which is being repaid with 30
level annual payments. The first payment will be one year from now.
John pays an additional $500 during the fourth and twelfth
payments. Following the two additional payments, the loan is repaid
by annual payments of the original size with a larger final payment
after the last full repayment.
If the effective annual interest rate is 5%, what is the amount
of the larger payment?
A. 480...
a 20-years annuity-immediate has annual payments . The first payment is 100 and subsequent payments are...
a 20-years annuity-immediate has annual payments . The
first payment is 100 and subsequent payments are increased by 100
until they reach 1000. The remaining payment stay at 1000. the
annual effective intersst rate 7.5% . What is the coast of this
annuity?
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- A group of 2 n 1 routers are interconnected in a centralized binary tree, with a...
- Returns earned over a given time period are called realized returns. Historical data on realized returns...
- 1. Explain the relationship between consumer learning requirements and adoption and diffusion of innovations. 2. Discuss...
- Case Application 3: TEAM FUN! Tony, the new director of human resources, and Edna, the compensation...
- discrete math Each different prime number represents a different colored block. For example, 2 represents a...
- Below, summarize in as few words as possible the progression of events leading to the Great...
- You receive a 3-year $23,000 loan with an interest rate of 13% p.a., to be repaid...
ADVERTISEMENT