What approximate annual rate of growth does this represent

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Q1. You want to buy an ordinary annuity that will pay you P4,000 a year for the next 20 years. You expect annual interest rates will be 8 percent over that time period. The maximum price you would be willing to pay for the annuity is closest to

a. 32,000

b. 39,273

c. 40,000

d. 80,000

Q2. You are considering investing in a zero-coupon bond that sells for P250. At maturity in 16 years it will be redeemed for P1,000. What approximate annual rate of growth does this represent?

a. 8 percent.

b. 9 percent.

c. 12 percent.

d. 25 percent.

Q3. Which of the following is an annuity?

a. Jack gets P10 this year and P20 next

b. Mah gets P10 in three months and P10 six months later

c. Bill gets P50 in six months and P20 six months later

d. Gates gets P100 every year for the rest of her life

Reference no: EM132859517

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