Question

1. You are 35 today. You are looking into buying a retirement annuity contract which will pay you a constant $10,000 per year, at the start of each year, for 15 years when you retire at 67. If the insurer marketing this contract has a cost of capital of 12%, how much will the fair market value of the contract be today?
2. How long (in years, to 2 decimals) does it take for you to save enough money for a house requiring $50,000 down payment if you plan to save $11,100 per year at 8% interest, starting today?

Answer has to be in excel formula.

Answer 1

Question -1:
Answer	$ 2,029.75
Working:
Step-1:Present Value of annual cash flow at 67
Present Value	=-pv(rate,nper,pmt,fv,1)
	= $ 76,281.68
Where,
rate	=	12%
nper	=	15
pmt	=	$   10,000.00
fv	=	0
Payment at the beginning of period	=	1
Step-2:Present value of single cash flows at 35
Present Value	=-pv(rate,nper,pmt,fv)
	= $ 2,029.75
Where,
rate	=	12%
nper	=	32
pmt	=	0
fv	=	$   76,281.68
Question -2:
Answer	3.74 Years
Working:
Number of period	=nper(rate,pmt,pv,fv,1)
	= 3.74 Years
Where,
rate	=	8%
pmt	=	$ -11,100.00
pv	=	0
fv	=	$   50,000.00
Payment at the beginning of period	=	1