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
Question: A deferred annuity policy is sold to a life aged 45 with the following benefits: • Basic payments start at $30,000 from age 65, increasing by $2,000 each year; •

Question 1: a) What is dependency ratio and why is it important for pensions? b) For which types of schemes is dependency ratio mostly relevant? Explain c) What is the

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

Compare the three investments below in terms of their riskiness. What is the best way to evaluate the riskiness of an investment given the information you have on them?

Plastic Money or Credit Card Finance This is finance of a kind whereby a company will make arrangements for the use of the services of credit card organizations via the purcha

Fixed income security can be defined as the financial obligation of an entity (known as the issuer), which promises to pay a specified amount of money on a pre-sp

Sole Proprietorship Definition - A sole proprietorship or sole tradership is the oldest and simplest form of business. It is that type of business organization where one person

Important Points - Creditors Finances When by using creditor's finances a company must consider: 1. That cost of finance is less than the Return that implies the rate shoul

How are earnings calculated for the Pe ratio?

Solve the following Linear Programming Problem using Simple method. Maximize Z= 3x1 + 2X2 Subject to the constraints: X1+ X2 = 4 X1 - X2 = 2 X1, X2 = 0