Variable annuity contract

Assignment Help Financial Management
Reference no: EM131620270

Sophia purchased a variable annuity contract with $90,000 purchase payment. Surrender charges begin with 8 percent in the first year and decline by 2 percent each year. In addition, Sophia can withdraw 11 percent of her contract value each year without paying surrender charges. In the first year, Sophia needed to withdraw $16,000. Assume that the contract value had not increased or decreased because of investment performance. What was the surrender charge Sophia had to pay?

Reference no: EM131620270

Questions Cloud

Buy piece of equipment-what is the internal rate of return : You buy a new piece of equipment for $14,761, and you receive a cash inflow of $2,300 per year for 10 years. What is the internal rate of return?
The greek crisis-a tragedy or opportunity : The Greek Crisis: A Tragedy or Opportunity?
Estimate your total insurance needs using dink method : You and your spouse are in good health and have reasonably secure careers. Estimate your total insurance needs using the DINK method.
Calculate the real rate of return : Calculate the real rate of return. What is my purchasing power?
Variable annuity contract : Sophia purchased a variable annuity contract with $90,000 purchase payment. What was the surrender charge Sophia had to pay?
About the retirement income goal : How much money will she have to accumulate in her company’s 401(k) plan over the next 40 years in order to reach her retirement income goal?
Assume that three years ago you purchased corporate bond : Assume that three years ago you purchased a corporate bond that pays 4.7 percent.
Saving accounts-investments in stocks and mutual funds : Shelly’s assets include money in checking and saving accounts, investments in stocks and mutual funds,
What would be your percentage return on investment : What would be your percentage return on investment if you bought when rates were 10 percent and sold when rates were 9 percent?

Reviews

Write a Review

 

Financial Management Questions & Answers

  What are the macaulay duration and modified duration

A Treasury bond that settles on October 18, 2013, matures on March 30, 2032. The coupon rate is 6.30 percent and the bond has a 5.85 yield to maturity. What are the Macaulay duration and modified duration?

  Compare and contrast the four job evaluation methods

Compare and contrast the four job evaluation methods.

  Calculate the greek connection’s net working capital

Calculate The Greek Connection’s net working capital in 2009. Calculate the cash conversion cycle of The Greek Connection in 2009.

  Outstanding issue of bond with par value

Zhen Yi Computers has an outstanding issue of bond with a par value of $1,000, with an annual 12% coupon rate. (However, note that interest payments on this bond are paid semi-annually) The bond was issued 25 years ago and has 5 years to maturity. Wh..

  What will be the effect on cash flows of this sale

Suppose you sell a fixed asset for $50,000 when its book value is $60,000. If your company's marginal tax rate is 40%, what will be the effect on cash flows of this sale (i.e., what will be the after-tax cash flow of this sale)?

  Compute the percentage total return

Suppose a stock had an initial price of $62 per share, paid a dividend of $1.10 per share during the year, Compute the percentage total return.

  Black scholes geometric brownian motion model

Consider a European Call in the Black Scholes Geometric Brownian Motion (GBM) model.

  What is the firm cost of preferred stock

During the last few years, Agile technologies has been too constrained by the high cost of capital to make many capital investments. Recently, though, money costs have been declining, and the company has decided to look seriously at a major expansion..

  How much in dividends were paid to shareholders

In its most recent financial statements, Newhouse Inc. reported $25 million of net income and $300 million of retained earnings. The previous retained earnings were $285 million. How much in dividends were paid to shareholders during the year? Assume..

  Items should be included in the analysis of new product

Which of the following items should be included in the analysis of a new product (potentially more than one or none)?

  Diventure strategy involves series of planned abandonment

A diventure strategy involves a series of planned abandonment which are announced ahead of time, but liquidation strategy involves an element of secrecy. The industry average P/e for athletics and apparel industry is 8. If Nike has earnings per share..

  Average real risk-free rate and average real risk premium

You’ve observed the following returns on Barnett Corporation’s stock over the past five years: –28.5 percent, 16 percent, 35 percent, 3.5 percent, and 22.5 percent. The average inflation rate over this period was 3.35 percent and the average T-bill r..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd