(Do not round intermediate calculations. If the absolute value of your result is less than 1,...

(Do not round intermediate calculations. If the absolute value of your result is less than 1, then put a zero before the decimal point, like 0.16.)

Farm Family Life Insurance Co. is selling a contract that pays $7,500 monthly to you and your heirs eternally. The contract currently sells for $585,000.

What is the monthly return on this investment vehicle? % (Enter your answer in percentage rounded to 2 decimal places, e.g., 32.16.)

What is the APR? % (Enter your answer in percentage rounded to 2 decimal places, e.g., 32.16.)

What is the effective annual return? % (Enter your answer in percentage rounded to 2 decimal places, e.g., 32.16.)

Solutions

Expert Solution

monthly return=monthly payment/current value

=7500/585000

=1.28%(Approx)

APR=1.28% per month*12 months

=15.38%(Approx)

EAR=[(1+APR/m)^m]-1
where m=compounding periods

=[(1+0.0128)^12]-1

=16.52%(Approx)

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

For each of the following, compute the future value: (Do not round intermediate calculations and round...

For each of the following, compute the future value: (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Present Value Years Interest Rate Future Value $ 2,450 10 13 % $ 9,853 23 8 103,305 17 6 241,382 33 4

For each of the following, compute the present value: (Do not round intermediate calculations and round...

For each of the following, compute the present value: (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Present Value Years Interest Rate Future Value $ 11 5 % $ 17,828 3 10 42,017 15 13 795,382 20 12 652,816

For each of the following, compute the future value: (Do not round intermediate calculations and round...

What is the PV of $260 received in: (Do not round intermediate calculations. Round your answers...

What is the PV of $260 received in: (Do not round intermediate calculations. Round your answers to 2 decimal places.) a. Year 8 (at a discount rate of 3%)? Present value $ b. Year 8 (at a discount rate of 15%)? Present value $ c. Year 13 (at a discount rate of 27%)? Present value $ d. Each of years 1 through 3 (at a discount rate of 14%)? Present value $

Complete the following using present value. (Use the Tableprovided.) (Do not round intermediate calculations. Round...

Complete the following using present value. (Use the Table provided.) (Do not round intermediate calculations. Round the "PV factor" to 4 decimal places and final answer to the nearest cent.)Amount desired at end of periodLength of timeRateCompoundedOn PV Table 12.3PV factor usedPV of amount desired at end of periodPeriod usedRate used$18,1005 years24%Quarterly%$

Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32....

Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32. A negative answer should be indicated by a minus sign. Problem: Project Evaluation Suppose you have been hired as a financial consultant to Defense Electronics, Inc. (DEI), a large, publicly traded firm that is the market share leader in radar detection systems (RDSs). The company is looking at setting up a manufacturing plant overseas to produce a new line of RDSs. This will be...

The following selected transactions are from Ohlm Company: (Do not round intermediate calculations and round your...

The following selected transactions are from Ohlm Company: (Do not round intermediate calculations and round your final answers to nearest whole number. Use 360 days a year.) 2015 Dec. 16 Accepted a $12,400, 60-day, 9% note dated this day in granting Danny Todd a time extension on his past-due account receivable. 31 Made an adjusting entry to record the accrued interest on the Todd note. 2016 Feb. 14 Received Todd’s payment of principal and interest on the note dated December...

Complete the following using present value. (Use the Table provided.) (Do not round intermediate calculations. Round...

Complete the following using present value. (Use the Table provided.) (Do not round intermediate calculations. Round the "PV factor" to 4 decimal places and final answer to the nearest cent.) Amount desired at end of period Length of time Rate Compounded On PV Table PV factor used PV of amount desired at end of period Period used Rate used $10,700 4 years 12% Monthly % $

Complete the following using present value. (Use the Table provided.) (Do not round intermediate calculations. Round...

Complete the following using present value. (Use the Table provided.) (Do not round intermediate calculations. Round the "PV factor" to 4 decimal places and final answer to the nearest cent.) Amount desired at end of period Length of time Rate Compounded On PV Table PV factor used PV of amount desired at end of period Period used Rate used $10,700 4 years 12% Monthly % $

Complete the following table: (Use Table 15.1) (Do not round intermediate calculations. Round your answers to...

Complete the following table: (Use Table 15.1) (Do not round intermediate calculations. Round your answers to the nearest cent.) First Payment Broken Down Into— Selling price Down payment Amount mortgage Rate Years Monthly payment Interest Principal Balance at end of month $150,000 $30,000 $120,000 7% 30 $ $ $ $

Subjects