Question

You inherited a 15-year annuity-immediate with level annual payments. You are told that the accumulated value of this annuity at the end of 15 years is 38,000. You are also told that the present value at the time of inheritance is $ 15,000. Determine the level of annual payments. Also, determine the annual effective interest rate earned by this trust.

Answer #1

r = [Future value /present value]^ 1/n -1

=[38000/15000]^1/15 -1

= [2.53333]^ .06667 -1

= 1.0639-1

= .0639 or 6.39%

Level of monthly payment = Future value /FVAD 6.39%,15

= 38000 / 23.97938

= 1584.69

An annuity-immediate has 20 annual payments starting at 5 and
increasing by 10 every year. The annual effective rate of interest
is 7%. Calculate the present value of this annuity.
not a excel solution

Find the accumulated value of a 10-year annuity-immediate of 100
per year if the first 6 payments are invested at an effective rate
of interest of 5% and the final 4 payments are invested at an
effective rate of interest of 4%. (Yield curve method)

Ace is receiving an annuity immediate with level annual payments
of 500 for 18 years.
Calculate the Macaulay duration and the Modified duration at an
annual effective rate of 6.9%.
(Round your answers to the nearest 2 decimal places.)

Calculate the accumulated value of an annuity immediate that
pays 1000 at the end of each quarter for 20 years. The interest
rate is 7% compounded quarterly.

sal
purchases two 20 year annuities immediate for 1000 each. the first
annuity has annual payments and was priced at 5.8% annual effective
rate. the second annuity has semi annual payments and was priced at
5.4% convertible semiannually. sal deposits all payments from two
annuities into an account that pays an annual effective rate of 6%.
what is the balance in Sal’s account at the end of 20 years?

1. Find the accumulated value of a 12-year annuity-immediate of
$500 per year, if the effective rate of interest (for all money) is
8% for the first 3 years, 6% for the following 5 years, and 4% for
the last 4 years.
The answer is $7,961.71.
Excel solution is preferred.

With total yearly payments of $10,000 for 10 years, compare the
compound accumulated at the end of the 10 years if the payments are
(1) at the end of the year, (2) weekly, and (3) continuous. The
effective (annual) interest rate is 8 percent, and the payments are
uniform. Also determine the present worth at time zero for each of
the three types of payments.

Write the symbol for the present value of an annuity immediate
that pays $2 monthly at an annual effective rate of 8% for 10 years
then calculate its value.

A 10-year annuity has annual payments of $1,000. The first
payment is in 1 year. If interest is 5%p.a (effective annual rate)
for the first 3 years followed by 6%p.a (effective annual rate) for
7 years, what is the future value of this annuity at the end of 10
years?
Select one:
a. $13,134.03
b. $13,001.45
c. $12,002.34
d. $13,969.78

An annuity immediate pays 200 every month for 10 years.
Calculate the present value at the following rates of interest:
Annual effective interest rate of 6%
Nominal interest rate convertible monthly of 8%
Nominal rate of discount convertible once every two years of
4%

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