Question

If you are expecting a settlement of $10,000 at the end of each year for five years, How much this annuity is worth today if the interest rate is 8% ?

Answer #1

Present value of the annuity=
**$39,927.10** calculated as follows:

An investment offers $10,000 at the end of each year for ten
years. (a) If you can earn 5 percent annually, what is this
investment worth today? (b) If you do not spend the annual payment
but invest it at 5 percent, how much will you have after the ten
years have lapsed?

An investment offers $10,000 at the end of each year for ten
years.
a.
If you can earn 10 percent annually, what is this investment
worth today?
b.
If you do not spend the annual payment but invest it at 10
percent, how much will you have after the ten years have
lapsed?

How much will be in an account at the end of five years the
amount deposited today is $10,000 and interest is 8% per year,
compounded semi-annually?

26. You have received a settlement from an insurance company
which will pay you $100,000 per year for 12 years at the end of
each year and J.G. Wentworth wants to buy your annuity. What is JG
Wentworth’s annual rate of return (interest rate) if they are
willing to pay you $500,000 today?
A. 7.56%
B. 18.21%
C. 16.94%
D. Interest rate cannot be
calculated.

2) Jay’s Electronics is expecting his maintenance cost for his
building to be $10,000 per year starting 2 years from now,
decreasing $1000 per year for the 4 years thereafter. For example,
in year 3 his maintenance costs will be $9000. How much does Jay
need in his bank account now to be able to pay the maintenance
costs for the next five years? Assume Jay can earn an interest rate
is 10% per year on his money.
Show your...

7. You are negotiating for the terms of a legal settlement, and
your opponent’s attorney has presented you with the following
alternative settlement alternatives:
a. $38,000 today in one lump sum.
b. $50,000 to be paid to you in five equal payments of $10,000
at the end of each of the next five years.
c. If your discount rate is 10%, what is the present value of
each of the alternatives and which alternative would you choose,
and why?

Answer the following:
A. Suppose you are trying to accumulate a balance of $10,000 by
the end of 8 years. You are trying to figure out how much you would
have to save at the beginning of each year for the next 8
years in an account earning 3% interest to reach your
target. Which formula would you use to solve for the cash
flows?
FV of an annuity
PV of an annuity
FV of an annuity due
PV of...

You will receive the following cash payments as a retirement
settlement: Year 0 1 2 3 4 Amount $10,000 $20,000 $50,000 $50,000
$75,000 In place of the above you are offered a check today for
$182,000. Assuming an interest rate of 4%, which would you choose?
If an interest rate of 5% was used would this change your
selection? Explain.
You are offered a choice as follows: $10,000 per year for 10
years or an amount today of $69,000. Assuming...

Q1.
An investment company offers you an annuity of $20,000 per year
for the next 10 years. The interest rate is 10%. How much would you
be willing to pay for the annuity?
Q2.
You have $100,000 to invest now and would also like to invest
$6,000 for each of the next five years in an investment which
returns 8% per year. With annual compounding, how much will your
investment be worth in 5 years?

a. An investment pays you $20,000 at the end of this year, and
$10,000 at the end of each of the four following years. What is
the present value (PV) of this investment, given that the
interest rate is 3% per year?
a. $27,753
b. $66,607
c. $55, 506
d. $44,405
B. A perpetuity has a PV of $27,000. If the interest rate is
4%, how much will the perpetuity pay every year?
a. $540
b. $864
c. $1080
d....

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 2 minutes ago

asked 6 minutes ago

asked 8 minutes ago

asked 9 minutes ago

asked 10 minutes ago

asked 10 minutes ago

asked 10 minutes ago

asked 10 minutes ago

asked 11 minutes ago

asked 12 minutes ago

asked 12 minutes ago

asked 12 minutes ago