Choosing the best annuity Personal Finance Problem Raina Herzig wishes to choose the best of four annuities available to her. In each case, in exchange for paying a lump sum today, she will receive equal, end-of-year cash payments for a specified number of years. She considers the annuities to be equally risky and is not concerned about their differing lives. Her decision will be based solely on the rate of return she will earn on each annuity. The key terms of the four annuities are shown in the following table, a. Calculate the rate of return on each of the four annuities Raina is considering. b. Given Raina's stated decision criterion, which annuity would you recommend? a. The rate of return, r, on annuity A is%. (Round to two decimal places.)

Choosing the best annuity Personal Finance Problem Raina Herzig wishes to choose the best of four annuities available to her. In each case, in exchange for paying a lump sum today, she will receive equal, end-of-year cash payments for a specified number of years. She considers the annuities to be equally risky and is not concerned about their differing lives. Her decision will be based solely on the rate of return she will earn on each annuity. The key terms of the four annuities are shown in the following table, a. Calculate the rate of return on each of the four annuities Raina is considering. b. Given Raina's stated decision criterion, which annuity would you recommend? a. The rate of return, r, on annuity A is%. (Round to two decimal places.)

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A perpetuity pays $85 per year and costs $3,580. What is the rate of return? Select the correct answer. O a. 4.17% Ob. 3.27% O c.0.57% d. 2.37% O e. 1.47%
2. Consider the data in the following table: Perpetuity Annual amount discount rateA 100,000 10B 3,000 6 Determine the present value of each perpetuity.
Use the table below to answer the following questions: Present Value of an Annuity of 1 Future Value of an Annuity of 1 Period 4% 5% 8% 10% 4% 5% 8% 10% 4 3.6299 3.5460 3.3121 3.1699 4.2465 4.3101 4.5061 4.6410 5 4.4518 4.3295 3.9927 3.7908 5.4163 5.5256 5.8666 6.1051 6 5.2421 5.0757 4.6229 4.3553 6.6330 6.8019 7.3359 7.7156 7 6.0021 5.7864 5.2064 4.8684 7.8983 8.1420 8.9228 9.4872 8 6.7327 6.4632 5.7466 5.3349 9.2142 9.5491 10.6366 11.4359 9 7.4353 7.1078 6.2469 5.7590 10.5828 11.0266 12.4876 13.5795 10 8.1109 7.7217 6.7101 6.1446 12.0061 12.5779 14.4866 15.9374 11 8.7605 8.3064 7.1390 6.4951 13.4864 14.2068 16.6455 18.5312 Bobby gets a yearly alimony payment from his ex-wife and wants to saves enough to put a 15% down payment on a home in 4 years. Median…
Use the table below to answer the following questions: Present Value of an Annuity of 1 Future Value of an Annuity of 1 Period 4% 5% 8% 10% 4% 5% 8% 10% 4 3.6299 3.5460 3.3121 3.1699 4.2465 4.3101 4.5061 4.6410 5 4.4518 4.3295 3.9927 3.7908 5.4163 5.5256 5.8666 6.1051 6 5.2421 5.0757 4.6229 4.3553 6.6330 6.8019 7.3359 7.7156 7 6.0021 5.7864 5.2064 4.8684 7.8983 8.1420 8.9228 9.4872 8 6.7327 6.4632 5.7466 5.3349 9.2142 9.5491 10.6366 11.4359 9 7.4353 7.1078 6.2469 5.7590 10.5828 11.0266 12.4876 13.5795 10 8.1109 7.7217 6.7101 6.1446 12.0061 12.5779 14.4866 15.9374 11 8.7605 8.3064 7.1390 6.4951 13.4864 14.2068 16.6455 18.5312 Bobby receives alimony payments every 6 months and the next payment is tomorrow. Median homes go for $950,000 and he wants to save $190,000 in 4 years. How much money should Bobby put away into an investment each time he receives alimony payments if he can get a 8% return a year? Group of answer choices…
(Present value of a perpetuity) What is the present value of a $ 4,500 perpetuity discounted back to the present at 13 percent? Question content area bottom Part 1 The present value of the perpetuity is $ enter your response here . (Round to the nearest cent.)
4. DETAILS ROLFFM8 5.3.009. Determine the amount of the ordinary annuity at the end of the given period. (Round your fir $6000 deposited semiannually at 5.8% annual interest for 10 years Additional Materials eBook □ Show My Work
What annual payment must you receive in order to earn a 6.5% rate of return on a perpetuity that has a cost of $4,800? a. $20.28 b. $292.96 c. $312.00 d. $156.00 e. $738.46
Use the table below to answer the following questions: Period 4 567 8 9 10 11 Present Value of an Annuity of 1 4% Future Value of an Annuity of 1 5% 5% 8% 10% 4% 8% 10% 3.6299 3.5460 3.3121 3.1699 4.2465 4.3101 4.5061 4.6410 4.4518 4.3295 3.9927 3.7908 5.4163 5.5256 5.8666 6.1051 5.2421 5.0757 4.6229 4.3553 6.6330 6.8019 7.3359 7.7156 6.0021 5.7864 5.2064 4.8684 7.8983 8.1420 8.9228 9.4872 5.7466 5.3349 9.2142 9.5491 10.6366 11.4359 7.4353 7.1078 6.2469 5.7590 10.5828 11.0266 12.4876 13.5795 8.1109 7.7217 6.7101 6.1446 12.0061 12.5779 14.4866 15.9374 8.7605 8.3064 7.1390 6.4951 13.4864 14.2068 16.6455 18.5312 6.7327 6.4632 Bobby receives alimony payments every 6 months and the next payment is tomorrow. Median homes go for $950,000 and he wants to save $190,000 in 4 years. How much money should Bobby put away into an investment each time he receives alimony payments if he can get a 8% return a year? $35,593 O $31,624 O $23,131 O $46,262
elow is a table for the present value of $1 at compound interest. Year 6% 10% 12% 1 0.943 0.909 0.893 2 0.890 0.826 0.797 3 0.840 0.751 0.712 4 0.792 0.683 0.636 5 0.747 0.621 0.567 Below is a table for the present value of an annuity of $1 at compound interest. Year 6% 10% 12% 1 0.943 0.909 0.893 2 1.833 1.736 1.690 3 2.673 2.487 2.402 4 3.465 3.170 3.037 5 4.212 3.791 3.605 Using the tables above, what would be the present value of $30,000 to be received three years from today, assuming an earnings rate of 6%?
s/d/e/1FAlpQLSfgr9AkfTTNtEDdijdlH8qi7BUKNWLBInw/rS 4ywgwjmAsw/formRespons O ) $3,802 d) $852. e) None of the above: 5. What is the future value of a b year ordinary annuity with annual payments of $200, evaluated at a 15 per O a) $ 670 44 O Di S 842.91 O as1.522 64 G) S1.348 48 6. What is the present value of a7-vearordjnaryennu payments of $300. evaluated at a 10 percentinterestrate? O a S 670 43
Below is a table for the present value of $1 at Compound interest. Year 6% 10% 12% 1 0.943 0.909 0.893 0.890 0.826 0.797 0.840 0.751 0.712 4 0.792 0.683 0.636 5 0.747 0.621 0.567 Below is a table for the present value of an annuity of $1 at compound interest. Year 6% 10% 12% 1 0.943 0.909 0.893 2 1.833 1.736 1.690 2.673 2.487 2.402 4 3.465 3.170 3.037 5 4.212 3.791 3.605 Using the tables above, what would be the present value of $17,594 (rounded to the nearest dollar) to be received 4 years from today, assuming an earnings rate of 10%? Oa. $17,594 Ob. $13,934 Oc. $55,773 Od. $12,017
• A perpetuity will pay $900 per year, starting five years after the perpetuity is purchased. What is the present value (PV) at time 0, given that the interest rate is 11%? • A) $2695 • B) $4312 • C) $5390 • D) $3234 Please show your steps.

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