An insurance company pays 5% per annum on money left with it. What would be the...

An insurance company pays 5% per annum on money left with it. What would be the cost of an annuity certain paying $250 at the end of each month for 10 years?

Expert Solution

	Cost of an annuity	P×[1-(1÷(1+r)^n)]÷r

	Here,

A	Interest rate per annum	5.00%
B	Number of years	10
C	Number of compoundings per per annum	12
A÷C	Interest rate per period ( r)	0.42%
B×C	Number of periods (n)	120
	Payment per period (P)	$ 250

	Cost of an annuity	$ 23,570.34
		250×(1-(1÷(1+0.42%)^120))÷0.42%

jeff jeffy answered 3 years ago

There is 40,000 in a fund which is accumulating at 5% per annum convertible continuously.If money...

There is 40,000 in a fund which is accumulating at 5% per annum convertible continuously.If money is withdrawn continuously at the rate of 2,400 per annum, how long will the fund last?

What is the duration of a 2-year bond that pays a coupon of 8% per annum...

What is the duration of a 2-year bond that pays a coupon of 8% per annum semiannually? It has a face value of $100. The yield on the bond is 10% per annum with continuous compounding.

What is duration of a 2-year bond that pays a coupon of 8% per annum semiannually?...

What is duration of a 2-year bond that pays a coupon of 8% per annum semiannually? The yield on the bond is 10% per annum with continuous compounding. (Show Work)

You deposit $10,000 in a certificate of deposit that pays interest of 4.25% per annum. What...

You deposit $10,000 in a certificate of deposit that pays interest of 4.25% per annum. What amount will your deposit grow to after five years if the bank compounds interest: a. Annually b. Semi-Annually c. Quarterly d. Monthly e. Daily Please show all your work and explain your answers.

An S&L pays 5% per annum compounded quarterly. Bert and Bertha are now 50 years old....

An S&L pays 5% per annum compounded quarterly. Bert and Bertha are now 50 years old. They will deposit $200 per quarter at the end of each quarter until they are 65 years old. How much is in their retirement account at the end of this period i.e. at 65? 3 months after their last deposit they start withdrawing equal amounts each quarter until they are 80 i.e. for the next 15 years Find the size of the withdrawals. How...

a. What would be the annual payments on an 8 percent per annum installment loan of...

a. What would be the annual payments on an 8 percent per annum installment loan of $1,000 with repayment over three years? b. Write out the amortization schedule for the loan. c. Now suppose that the payments were to be made on a semiannual basis: what would the semiannual payments be? Assume the 0.08 is a nominal rate. d. Is the total paid in case (c) less or more than in the former case? Why?

There is a 30 year bond, which pays 6% per annum at the timethat required...

There is a 30 year bond, which pays 6% per annum at the time that required rates are10%. We buy with the intention of selling it in 4 years at which time the required rate is 6%. How much do we sell it in 4 years, and how much do we buy it now?

B. There is a 30 year bond, which pays 6% per annum at the time that...

B. There is a 30 year bond, which pays 6% per annum at the time that required rates are10%. We buy with the intention of selling it in 4 years at which time the required rate is 6%. How much do we sell it in 4 years, and how much do we buy it now?

Assume that you deposit $ 1,704 into an account that pays 7 percent per annum. How...

Assume that you deposit $ 1,704 into an account that pays 7 percent per annum. How much money will be in the account 25 years from today? (Round your answer to 2 decimal places; record your answer without commas and without a dollar sign).

An investment firm (Firm A) pays 10% interest per annum, compounded on a quarterly basis. To...

An investment firm (Firm A) pays 10% interest per annum, compounded on a quarterly basis. To remain competitive, the investment manager of another firm (Firm B) is willing to match the interest rate offered by Firm A, but interest will be compounded on a monthly basis. What nominal rate of interest must Firm B offer to its clients?

Question