Question

1. A 6-year annuity making quarterly payments of 3250 will make its first payment 11 years and 3 months from today. You would like to purchase this annuity 2 years from today. If you want to earn an effective annual rate of 7.5% what should you be willing to pay 2 years from now? Enter your answer below to the nearest dollar.

2. What is the equivalent compound quarterly rate for 10% compound monthly? (convert from compound monthly to compound quarterly). Enter your answer below as a percent to 4 decimal places.

3. What is the equivalent compound weekly rate for 11% compound quarterly? (convert from compound quarterly to compound weekly). Enter your answer below as a percent to 4 decimal places.

Answer 1

1.
=3250/((1+7.5%)^(1/4)-1)*(1-1/(1+(1+7.5%)^(1/4)-1)^(4*6))*1/(1+(1+7.5%)^(1/4)-1)^(4*11)*(1+(1+7.5%)^(1/4)-1)^(4*2)
=32708.6748

2.
=((1+10%/12)^(12/4)-1)*4=10.0836%

3.
=((1+11%/4)^(4/52)-1)*52=10.8628%