Question

Betty received $ 500,000 from a life insurance policy to be distributed to her as an...

Betty received $ 500,000 from a life insurance policy to be distributed to her as an annuity certain in 10 equal annual installments with the first payment made immediately. On the day she receives her third payment, she is offered a monthly perpetuity of X in lieu of the future annual payments. The first payment will be made in exactly one month. The effective annual rate of interest is 5 %. Determine the value of X.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1


Dear Learner,

"I hope, i've resolved your problem. If you find any issue feel free to comment. Please give it a thumbs up, if your issue get resolved, it motivates me alot."

Thanks

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
Juanita purchased a life insurance policy on her 60thbirthday. Her monthly contribution to her life insurance...
Juanita purchased a life insurance policy on her 60thbirthday. Her monthly contribution to her life insurance fund is $150. When she dies, her beneficiary will be awarded $100,000. Calculate the expected value of the insurance payout, if she dies exactly 1 year after she purchases the policy. probability of dying between 52-72 = .078 We know, thatif she dies, she will get the full $100,000. But what is the EXPECTED VALUE of her return from the policy at the end...
Sonja, age 25, recently purchased a $100,000 ordinary life insurance policy on her life. The waiver-of-premium...
Sonja, age 25, recently purchased a $100,000 ordinary life insurance policy on her life. The waiver-of-premium rider and guaranteed purchase option are attached to the policy. For each of the following situations, indicate the extent of the insurer’s obligation, if any, to Sonja or to Sonja’s beneficiary. Identify the appropriate policy provision or rider that applies in each case. Treat each event separately. a. Sonja fails to pay the second annual premium due on January 1. She dies 15 days...
Renee age 37 begins a new job and is offered group term life insurance at her...
Renee age 37 begins a new job and is offered group term life insurance at her company. Her salary will be $125,000 per year and the company provides at no charge group term life insurance of 1x annual salary. She also has the option to purchase, and pay a monthly premium via salary deduction for up to 4 x salary with no medical exam. She can also purchase up to 10 x her salary but must provide evidence of insurability....
1)A 60-year-old grandmother wants a life insurance policy that could replace her annual $55,000 earnings for...
1)A 60-year-old grandmother wants a life insurance policy that could replace her annual $55,000 earnings for the next 10 years. If the long-term interest rate is now 6.2%, how large of a life insurance policy does she need? 2)You can afford monthly deposits of $200 into an account that pays 6.2% compounded monthly. How many months will it be until you have $15,000 to buy a car?
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 60000 7500 25 B 50000...
Jasper is bequeathed a thirty year deferred annuity that has a payment at the the end...
Jasper is bequeathed a thirty year deferred annuity that has a payment at the the end of each third year. The first payment is for $15000 and is made five years after she receives inheritance. There is always an increase of $ 4000 from one payment to the next. Find the value of her legacy at the time of the bequest, assuming that annual effective interest rate remains level at 5%. The answer is 125325.91, please use financial math to...
Catfish Hunter’s 1974 baseball contract with the Oakland Athletics called for half of his $100,000 salary...
Catfish Hunter’s 1974 baseball contract with the Oakland Athletics called for half of his $100,000 salary to be paid to a life insurance company of his choice for the purchase of a deferred annuity. More precisely, there were to be semi-monthly contributions in Hunter’s name to the Jefferson Insurance Company with the first payment on April 16 and the final payment on September 30. We suppose that the first eleven of these were to be for $4,166.67 and the final...
1. Just before his first attempt at bungee jumping, John decides to buy a life insurance...
1. Just before his first attempt at bungee jumping, John decides to buy a life insurance policy. His annual income at age 30 is $39,000, so he figures he should get enough insurance to provide his wife and new baby with that amount each year for the next 35 years. If the long-term interest rate is 6.1%, what is the present value of John's future annual earnings? (Round your answer to the nearest cent.) $   Rounding up to the next...
6. Future value of annuities There are two categories of cash flows: single cash flows, referred...
6. Future value of annuities There are two categories of cash flows: single cash flows, referred to as “lump sums,” and annuities. Based on your understanding of annuities, answer the following questions. Which of the following statements about annuities are true? Check all that apply. Annuities are structured to provide fixed payments for a fixed period of time. When equal payments are made at the beginning of each period for a certain time period, they are treated as an annuity...
Problem 4-6A Roadside Travel Court was organized on July 1, 2016, by Betty Johnson. Betty is...
Problem 4-6A Roadside Travel Court was organized on July 1, 2016, by Betty Johnson. Betty is a good manager but a poor accountant. From the trial balance prepared by a part-time bookkeeper, Betty prepared the following income statement for her fourth quarter, which ended June 30, 2017. ROADSIDE TRAVEL COURT Income Statement For the Quarter Ended June 30, 2017 Revenues   Rent revenue $216,900 Operating expenses   Advertising expense $ 3,830   Salaries and wages expense 84,370   Utilities expense 945   Depreciation expense 2,925...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT