Return on the annuity, Finance Basics

An insurance company offers you and end of year annuity of $48,000 per year for the next 20 years. They claim your return on the annuity is 9%. What is the most you would be willing to pay today for this annuity? 

a

Amount offered every year by

   
 

insurance company

   

 mce_markernbsp;                     48,000.00

b

Period (Years)

   

20

c

Interest rate claimed

 

9%

d

Present Value of the annuity

   
 

of 20 years

   

$438,170.19

           
 

Note: Assumed amount received at the end of the year.


 

Posted Date: 7/23/2012 2:08:45 AM | Location : United States







Related Discussions:- Return on the annuity, Assignment Help, Ask Question on Return on the annuity, Get Answer, Expert's Help, Return on the annuity Discussions

Write discussion on Return on the annuity
Your posts are moderated
Related Questions
What role do primary financial markets play in our economy? What role do secondary markets fill? Describe the relationship that exists between financial institutions and financial

Illustrate in brief about the Investment  Process A  typical  investment  decision  undergoes  a  five  step  procedure which, in turn, forms the foundation of investment pr

Bob and Jackie came to your bank seeking an FHA mortgage. They want to know how large a mortgage they would be qualified for and what the terms would be. Bob is a pastry chef (

A prospective developer is considering purchasing a site for the construction of a ‘Business Village’ at a price of £750 000. It will provide a let-able office floor space of 17 50

One of the projects the US loan would fund is to build earthquake-resistant buildings. The project will begin in March 2013, last for two years and is expected to have the followin

Functions of Capital Markets Functions of Capital Markets are as: 1. Providing long term funds that are essential for investment decisions. 2. Provide advices to investo

Example of Quantity Discounts Consider illustration one and suppose that a quantity discount of 5 percent is given whether a minimum 200 units is ordered. Required Fin

WHy does most interbank currency trading worldwide involve the US dollar?"

The operating and cost data of ABC Ltd. are: Sales Rs. 20,00,000 Vari

Collection Policy The firm's collection policy may affect also our study.  The higher the cost of collecting accounts obtainable the lower the bad debt losses.  Therefore the