Your aunt is about to retire, and she wants to buy an annuitythat will provide...

Your aunt is about to retire, and she wants to buy an annuity that will provide her with income of $26,500 per year for 30 years, beginning a year from today. The interest rate is 7%. How much would the annuity cost her today?

	a.	$259,805.12
	b.	$328,839.59
	c.	$378,481.53
	d.	$250,321.65
	e.	$2,503,217

Expert Solution

- Aunt will buy an annuity that will provide her $26,500 per year for 30 years,beginning a year from today.

Calculating the Present Value of annuity today that would cost her:-

Where, C= Periodic Payments = $26,500

r = Periodic Interest rate = 7%

n= no of periods =30

Present Value = $328,839.59

So, the annuity would cost her today is $328,839.59

Option B

If you need any clarification, you can ask in comments.

jeff jeffy answered 2 years ago

Your aunt has $780,000 invested at 5.5%, and she now wants to retire. She wants to...

Your aunt has $780,000 invested at 5.5%, and she now wants to retire. She wants to withdraw $45,000 at the beginning of each year, beginning immediately. She also wants to have $50,000 left to give you when she ceases to withdraw funds from the account. For how many years can she make the $45,000 withdrawals and still have $50,000 left in the end?

Your father is about to retire, and he wants to buy an annuity that will provide...

Your father is about to retire, and he wants to buy an annuity that will provide him with $78,000 of income a year for 25 years, with the first payment coming immediately. The going rate on such annuities is 5.15%. How much would it cost him to buy the annuity today?

Your Aunt Ruth has $340,000 invested at 7%, and she plans to retire. She wants to...

Your Aunt Ruth has $340,000 invested at 7%, and she plans to retire. She wants to withdraw $40,000 at the beginning of each year, starting immediately. How many years will it take to exhaust her funds, i.e., run the account down to zero? 15 13 12 16 14

Uncle Bob is about to retire and he wants to buy an annuity that will provide...

Uncle Bob is about to retire and he wants to buy an annuity that will provide him with $8400 of income a year for 30 years with the first payment coming immediately the going rate on such annuities is 15.25% how much would it cost him too buy the annuity today

1. Your father is about to retire, and he wants to buy an investment that will...

1. Your father is about to retire, and he wants to buy an investment that will provide him with $100,000 of income per year for 20 years, beginning a year from today. In addition, on the 20th anniversary (when the last payment of $100,000 occurs), he wants to withdraw a lumpsum of $250,000 (in addition to the last receipt of$100,000). The going rate on such annuities is 4.0%. How much would it cost him to buy such an annuity today...

Julia, your aunt, currently is 55 years old; she will retire at the age of 60....

Julia, your aunt, currently is 55 years old; she will retire at the age of 60. Last month, Julia just formed a portfolio with stock A, B, and C. Julia invest her retirement money equally in all 3 assets. Beta of each assets are as follows; bA = 2.21; bB = 1.85; and bC = 1.75 Aunt Julia is a very conservative investor, she can accept minimal risk and she can bear the maximum loss only 5% of her investment,...

2. Your Aunt is thinking about opening a hardware store. She estimates that it would cost...

2. Your Aunt is thinking about opening a hardware store. She estimates that it would cost 500k per year to rent the location and buy the stock. In addition, she would have to quit her 50k/year job as an accountant. Define Opportunity cost. What is your aunt's opportunity cost of running the hardware store for a year? If your aunt thinks she can sell 510k worth of merchandise in a year, should she open the store? Explain. 3. You are...

Juanita is deciding whether to buy a dress that she wants, as well as where to buy it.

Juanita is deciding whether to buy a dress that she wants, as well as where to buy it. Three stores carry the same dress, but it is more convenient for Juanita to get to some stores than others. For example, she can go to her local store, located 15 minutes away from where she works, and pay a marked-up price of $103 for the dress:StoreTravel Time Each WayPrice of a Dress(Minutes)(Dollars per dress)Local Department Store15103Across Town3089Neighboring City6063Juanita makes $16 an...

Juanita is deciding whether to buy a dress that she wants, as well as where to buy it

Juanita is deciding whether to buy a dress that she wants, as well as where to buy it. Three stores carry the same dress, but it is more convenient for Juanita to get to some stores than others. For example, she can go to her local store, located 15 minutes away from where she works, and pay a marked-up price of $129 for the dress:StoreTravel Time Each Way (Minutes)Price of a Dress (Dollars per dress)Local Department Store15129Across Town3086Neighboring City6063Juanita makes \(\$...

Ann wants to buy a building. The annual NOI will be $100,000 She wants a 30...

Ann wants to buy a building. The annual NOI will be $100,000 She wants a 30 year fully amortizing fixed rate mortgage at an annual rate of 5% with compounding monthly payments. The lender has a minimum DSCR of 1.2. If Ann gets a 50% LTV loan for $500,000 what is her DCSR?

Question