Question

In: Finance

An insurance agent called your folks and offered them an opportunity to purchase an annuity for...

An insurance agent called your folks and offered them an opportunity to purchase an annuity for $8,531.03 that will pay them $1,000 per year for 20 years. What would they be making on there investment of $8,531. What tate of return would they earn?
The annual rate of return your folks would earn on their investment is __%.
(round to two decimal places)

Solutions

Expert Solution

Let rate of return be x%

At this rate;present value of annuity=8,531.03

8,531.03=1,000/1.0x+1,000/1.0x^2+.............+1,000/1.0x^20

Hence x=rate of return=9.97%(Approx).

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

Your folks just called and would like some advice from you. An insurance agent just called...
Your folks just called and would like some advice from you. An insurance agent just called them and offered them the opportunity to purchase an annuity for ​$29,652.76 that will pay them ​$3,000 per year for 20 ​years, but they​ don't have the slightest idea what return they will be making on their investment of ​$29,652.76. What rate of return will they be​ earning?
Your folks just called and would like some advice from you. An insurance agent just called...
Your folks just called and would like some advice from you. An insurance agent just called them and offered them the opportunity to purchase an annuity for ​$21,320.41 that will pay them ​$2,000 per year for 20 years. They​ don't have the slightest idea what return they would be making on their investment of ​$21,320.41. What rate of return would they be​ earning? The annual rate of return your folks would be earning on their investment is nothing​%. ​
Your folks just called and would like some advice from you. An insurance agent just called...
Your folks just called and would like some advice from you. An insurance agent just called them and offered them the opportunity to purchase an annuity for $23,634.31 that will py them $3,500 per year for 10 years. They don't have the slightest idea what return they would be making on their investment of $23,634.31. The rate of return would they be earning on their investment is what percent?
Boyer Slick, your insurance agent, proposed to you an annuity contract offered by his firm. It...
Boyer Slick, your insurance agent, proposed to you an annuity contract offered by his firm. It requires an investment of $20,000 and will pay $2,500 per year for the next 20 years. You believe an appropriate required rate of return on an investment of this risk class is 8.5%. a. Evaluate this investment using the present value approach and recommend its acceptance or rejection. b. Now evaluate this investment using the rate of return approach and make the appropriate recommendation...
Your broker called earlier today and offered you the opportunity to invest in a security. As...
Your broker called earlier today and offered you the opportunity to invest in a security. As a friend, he suggested that you compare the current, or present value, cost of the security and the discounted value of its expected future cash flows before deciding whether or not to invest. The decision rule that should be used to decide whether or not to invest should be:
Your insurance agent is trying to sell you an annuity that costs $45,000 today. By buying...
Your insurance agent is trying to sell you an annuity that costs $45,000 today. By buying this annuity, your agent promises that you will receive payments of $380 per month for 15 years. What is the rate of return expressed as an APR on this investment? (a) 6.87% (b) 5.01% (c) 5.76% (d) 6.01% (e) 5.55%
Your insurance agent is trying to sell you an annuity that costs $60,000 today. By buying...
Your insurance agent is trying to sell you an annuity that costs $60,000 today. By buying this annuity, your agent promises that you will receive payments of $315 per month for 30 years. What is the rate of return expressed as an APR on this investment? Multiple Choice 4.44% 4.81% 4.00% 5.49% 4.72%
Your insurance agent is trying to sell you an annuity that costs $60,000 today. By buying...
Your insurance agent is trying to sell you an annuity that costs $60,000 today. By buying this annuity, your agent promises that you will receive payments of $475 per month for 15 years. What is the rate of return expressed as an APR on this investment?
An insurance agent is trying to sell you an​ annuity, that will provide you with ​$6...
An insurance agent is trying to sell you an​ annuity, that will provide you with ​$6 comma 5006,500 at the end of each year for the next 1515 years. If you​ don't purchase this​ annuity, you can invest your money and earn a return of 77​%. What is the most you would pay for this annuity right​ now? Ignoring​ taxes, the most you would pay for this annuity is ​$nothing .
An insurance agent is trying to sell you an​ annuity, that will provide you with ​$6,500...
An insurance agent is trying to sell you an​ annuity, that will provide you with ​$6,500 at the end of each year for the next 15 years. If you​ don't purchase this​ annuity, you can invest your money and earn a return of 7​%. What is the most you would pay for this annuity right​ now?
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT