What is the monthly interest rate on this annuity

Assignment Help Financial Management
Reference no: EM131835072

Professor’s Annuity Corp. offers a lifetime annuity to retiring professors. For a payment of $70,000 at age 65, the firm will pay the retiring professor $350 a month until death.

a. If the professor’s remaining life expectancy is 20 years, what is the monthly interest rate on this annuity? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

b. What is the effective annual interest rate? (Use the monthly rate computed in part (a) rounded to 2 decimal places when expressed as a percent. Enter your answer as a percent rounded to 2 decimal places.)

c. If the monthly interest rate is 1.00%, what monthly annuity payment can the firm offer to the retiring professor? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Reference no: EM131835072

Questions Cloud

Calculate the convexity of bond : Calculate the convexity of a bond that has a $1,000 par value, pays a 3.25% coupon rate, sells for 986.679, and matures in 6 years.
Calculate the ending balance of the cumulative exchange gain : Calculate the ending balance of the cumulative exchange gain, cumulative OCI. the acquisition differential should be added to the net book value of equipment?
A two-year treasury strip has yield and three treasury strip : A two-year Treasury strip has a yield of 4.4%, and the three Treasury strip has a yield of 5.29%.
The loan off by making your planned monthly payments : How much faster could you pay the loan off by making your planned monthly payments of $270 with the new card?
What is the monthly interest rate on this annuity : If the professor’s remaining life expectancy is 20 years, what is the monthly interest rate on this annuity? What is the effective annual interest rate?
Two investment accounts : You have your choice of two investment accounts.How much money would you need to invest in B today for it to be worth as much as Investment A 12 years from now?
Invested in each share class if your investment horizon : What is the difference in values of $1 invested in each share class if your investment horizon is 3 years?
How many of each type of bond must the firm purchase : You may assume annual payments. How many of each type of bond must the firm purchase?
Calculate the NPV of project is MACRS depreciation is used : White Enterprises just invested in a black light health management system at a cost of $600,000. Calculate the NPV of the project is MACRS depreciation is used.

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

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