Question
In: Finance
Nicki Johnson, a sophomore mechanical engineering student, receives a call from an insurance agent, who believes...
Nicki Johnson, a sophomore mechanical engineering student, receives a call from an insurance agent, who believes that Nicki is an older woman ready to retire from teaching. He talks to her about several annuities that she could buy that would guarantee her an annual fixed income. The annuities are as follows in the popup window
ANNUITY INITIAL PAYMENT INTO ANNUITY (AT t =
0) AMOUNT OF MONEY RECEIVED PER YEAR
DURATION OF ANNUITY (YEARS)
A 60,000 9,000 15
B 50,000 7,500 12
C 50,000 6,500 22
What rate of return could Nicki earn on her money if she place it in annuity A with $9,000 payment per year and 15 years duration?
Solutions
Expert Solution
solution :
rate of return of A
= RATE( 15, (9,000), 60000, 0) = 12.40%
rate of return B
= RATE ( 12 , (7,500) , 50,000,0) = 10.45%
rate of retturn C
= RATE ( 22,(6500),50000,0) = 11.90%
jeff jeffy answered 1 year agoRelated Solutions
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