Question

In: Finance

D. Rom has just given an insurance company $45,500. In return, he will receive an annuity...

D. Rom has just given an insurance company $45,500. In return, he will receive an annuity of $6,400 for 20 years.

At what rate of return must the insurance company invest this $45,500 in order to make the annual payments? Use Appendix D for an approximate answer, but calculate your final answer using the financial calculator method. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Solutions

Expert Solution

The formulas and the inputs used is as follows:


The result is as follows:


jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

C. D. Rom has just given an insurance company $32,500. In return, he will receive an...
C. D. Rom has just given an insurance company $32,500. In return, he will receive an annuity of $3,800 for 20 years.   At what rate of return must the insurance company invest this $32,500 in order to make the annual payments? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)    Rate of Return ____________ %
C. D. Rom has just given an insurance company $44,500. In return, he will receive an...
C. D. Rom has just given an insurance company $44,500. In return, he will receive an annuity of $6,200 for 20 years.   At what rate of return must the insurance company invest this $44,500 in order to make the annual payments? Use Appendix D for an approximate answer, but calculate your final answer using the financial calculator method. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
C. D. Rom has just given an insurance company $33,500. Inreturn, he will receive an...
C. D. Rom has just given an insurance company $33,500. In return, he will receive an annuity of $4,000 for 20 years.  At what rate of return must the insurance company invest this $33,500 in order to make the annual payments? Use Appendix D for an approximate answer, but calculate your final answer using the financial calculator method. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)  Rate of return _______%
An insurance company has three types of annuity products: indexed annuity, fixed annuity, and variable annuity....
An insurance company has three types of annuity products: indexed annuity, fixed annuity, and variable annuity. You are given: None of the customers have both fixed annuity and variable annuity. 40% of the customers with fixed annuity also have indexed annuity. Half of the customers with two annuity products have variable annuity. 60% of the customers have indexed annuity. The number of customers who have only the variable annuity is the same as the number of customers who have two...
An insurance company has three types of annuity products: indexed annuity, fixed annuity, and variable annuity....
An insurance company has three types of annuity products: indexed annuity, fixed annuity, and variable annuity. You are given: None of the customers have both fixed annuity and variable annuity. 40% of the customers with fixed annuity also have indexed annuity. Half of the customers with two annuity products have variable annuity. 60% of the customers have indexed annuity. The number of customers who have only the variable annuity is the same as the number of customers who have two...
You are an insurance company and have sold an annuity to a customer. The annuity pays...
You are an insurance company and have sold an annuity to a customer. The annuity pays 240 monthly payments (the same each month) starting 12 months from today. The monthly paymenst are $500 per month. If your firm earns 5.00% APR (compounded monthly), on its investments, how much does it have to invest today to just cover the cost of the annuity?
(Growth annuity) Michael has just signed a professional basketball contract where he will earn $2,500,000 the...
(Growth annuity) Michael has just signed a professional basketball contract where he will earn $2,500,000 the first year and will receive a 5% annual increase every year for 10 years. He plans to save 50% of his annual salary each year in a mutual fund where he expects to earn 16% annually. How much will she have in his savings after 10 years. Please show all work in excel, thank you!
Scenario: Davis Skaros has recently been promoted to production manager. He has just started to receive...
Scenario: Davis Skaros has recently been promoted to production manager. He has just started to receive various managerial reports, including the production cost report you prepared. It showed his department had 2,000 equivalent units in ending inventory. His department has had a history of not keeping enough inventory on hand to meet demand. He has come to you, very angry, and wants to know why you credited him with only 2,000 units when he knows he had at least twice...
Scenario: Davis Skaros has recently been promoted to production manager. He has just started to receive...
Scenario: Davis Skaros has recently been promoted to production manager. He has just started to receive various managerial reports, including the production cost report you prepared. It showed his department had 2,000 equivalent units in ending inventory. His department has had a history of not keeping enough inventory on hand to meet demand. He has come to you, very angry, and wants to know why you credited him with only 2,000 units when he knows he had at least twice...
An insurance company is trying to sell you a retirement annuity. The annuity will give you...
An insurance company is trying to sell you a retirement annuity. The annuity will give you 20 payments with the first payment in 12 years when you retire. The insurance firm is asking you to pay $50,000 today. If this is a fair deal, what must the payment amount be (to the dollar) if the interest rate is 8 percent? please show in excel
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT