We Pay Insurance Co. will pay you $1,025 each quarter for 21 years. You want to...

We Pay Insurance Co. will pay you $1,025 each quarter for 21 years. You want to earn a minimum interest rate of .82 percent per quarter. What is the most you are willing to pay today for these payments?

Solutions

Expert Solution

Payment each quarter = P = 1025

Number of periods = n = 21*4 = 84 quarters

Interest Rate = 0.82 % or 0.0082 quarterly

Present Value = P[1 - (1+r)^-n]/r = 1025(1 - 1.0082^-84)/0.0082 = $62051.15

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

We Pay Insurance Co. will pay you $1,425 each quarter for 26 years. You want to...

We Pay Insurance Co. will pay you $1,425 each quarter for 26 years. You want to earn a minimum interest rate of .98 percent per quarter. What is the most you are willing to pay today for these payments?

We Pay Insurance Co. will pay you $1,350 each quarter for 23 years. You want to...

We Pay Insurance Co. will pay you $1,350 each quarter for 23 years. You want to earn a minimum interest rate of .95 percent per quarter. What is the most you are willing to pay today for these payments?

We Pay Insurance Co. will pay you $1,125 each quarter for 25 years. You want to...

We Pay Insurance Co. will pay you $1,125 each quarter for 25 years. You want to earn a minimum interest rate of .86 percent per quarter. What is the most you are willing to pay today for these payments?

We Pay Insurance Co. will pay you $1,100 each quarter for 24 years. You want to...

We Pay Insurance Co. will pay you $1,100 each quarter for 24 years. You want to earn a minimum interest rate of .85 percent per quarter. What is the most you are willing to pay today for these payments?

A perpetuity will pay $1,025 per year, starting five years after the perpetuity is purchased

A perpetuity will pay $1,025 per year, starting five years after the perpetuity is purchased. What is the present value of this perpetuity on the date that it is purchased, given that the interest rate is 9%. Show your work or inputs.

You want to get a mortgage, but can only afford to pay $1200 per quarter.

You want to get a mortgage, but can only afford to pay $1200 per quarter. How much can you borrow, if the interest rate is 5% annually for a 30 year mortgage?

A life insurance co. is trying to sell you an investment policy that will pay you...

A life insurance co. is trying to sell you an investment policy that will pay you and your heirs $15367 per year forever. If the policy costs $546357 today, at what interest rate (in percent) is it properly priced? Answer to two decimals.

Larry’s Life Insurance Co. is trying to sell you an investmentpolicy that will pay you...

Larry’s Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $25,000 per year forever. If the required return on this investment is 4percent, how much will you pay for the policy?

Curly’s Life Insurance Co. is trying to sell you an investment policy that will pay you...

Curly’s Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $42,000 per year forever. Assume the required return on this investment is 6.7 percent. How much will you pay for the policy? Policy value today =

Curly’s Life Insurance Co. is trying to sell you an investment policy that will pay you...

Curly’s Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $40,000 per year forever. A representative for Curly’s tells you the policy costs $650,000. At what interest rate would this be a fair deal? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Subjects