Question

You wish to receive an income of $1,300 per year. The payments will be received at...

You wish to receive an income of $1,300 per year. The payments will be received at the beginning of the year. You will receive a total of 45 payments. Your account earns a rate of return of 10.2 percent compounded annually. How much must you put in the account today?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

We can find the answer using the formula for present value of annuity due.

Where,
PVA = Present Value of Annuity
A = Annuity or payment per period
i = rate of interest
n = number of payments

Substituting the values in the formula, we get:

Therefore, you have to put $13,867.53 in your account today.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
You are set to receive an annual payment of $11,300 per year for the next 19...
You are set to receive an annual payment of $11,300 per year for the next 19 years. Assume the interest rate is 6.2 percent. How much more are the payments worth if they are received at the beginning of the year rather than the end of the year?
You are set to receive an annual payment of $11,900 per year for the next 15...
You are set to receive an annual payment of $11,900 per year for the next 15 years. Assume the interest rate is 6.8 percent. How much more are the payments worth if they are received at the beginning of the year rather than the end of the year? Multiple Choice $7,230.88 $6,647.75 $7,837.34 $7,464.14 $6,997.63
You are set to receive an annual payment of $12,200 per year for the next 18...
You are set to receive an annual payment of $12,200 per year for the next 18 years. Assume the interest rate is 7.1 percent. How much more are the payments worth if they are received at the beginning of the year rather than the end of the year? Multiple Choice $8,650.65 $8,380.31 $7,704.48 $8,109.98 $9,083.18
You wish to have $2,500,000 in your investment account forty years from now when you retire....
You wish to have $2,500,000 in your investment account forty years from now when you retire. You plan to accumulate this sum by making weekly deposits into a mutual fund compounded weekly. If the fund earns a rate of return of 12% annually, how much must you contribute each week? (Answer is 48.76)
a. What is the amount of the annuity purchase required if you wish to receive a...
a. What is the amount of the annuity purchase required if you wish to receive a fixed payment of $240,000 for 20 years? Assume that the annuity will earn 10 percent per year. b. Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 20-year annuity is $1.4 million and the annuity earns a guaranteed annual return of 10 percent. The payments are to begin at the end of the current year. c....
A. What is the amount of the annuity purchase required if you wish to receive a...
A. What is the amount of the annuity purchase required if you wish to receive a fixed payment of $260,000 for 15 years? Assume that the annuity will earn 13 percent per year. B. Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 15-year annuity is $1.6 million and the annuity earns a guaranteed annual return of 13 percent. The payments are to begin at the end of the current year. C....
(Future value) You are hoping to buy a house in the future and recently received an...
(Future value) You are hoping to buy a house in the future and recently received an inheritance of $24,000.You intend to use your inheritance as a down payment on your house. a. If you put your inheritance in an account that earns 8 percent interest compounded annually, how many years will it be before your inheritance grows to $ 35,000? (Round to one decimal​ place.) b. If you let your money grow for 10.25 years at 8 percent, how much...
You will receive 26 annual payments of $41,500. The first payment will be received 6 years...
You will receive 26 annual payments of $41,500. The first payment will be received 6 years from today and the interest rate is 5.8 percent. What is the value of the payments today?
You are hoping to buy a house in the future and recently received an inheritance of...
You are hoping to buy a house in the future and recently received an inheritance of $18,000. You intend to use your inheritance as a down payment on your house. If you put your inheritance in an account that earns 88 percent interest compounded​ annually, how many years will it be before your inheritance grows to $33,000​? If you let your money grow for 10.5 years at 88 percent​, how much will you​ have? How long will it take your...
Assume that Social Security promises you $ 33 000 per year starting when you retire 45...
Assume that Social Security promises you $ 33 000 per year starting when you retire 45 years from today​ (the first $ 33000 will get paid 45 years from​ now). If your discount rate is 4 %​, compounded​ annually, and you plan to live for 17 years after retiring​ (so that you will receive a total of 18 payments including the first​ one), what is the value today of Social​ Security's promise?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT