What rate of return could nicki earn on her money

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Reference no: EM133430506

Nicki? Johnson, a sophomore mechanical engineering? student, receives a call from an insurance? agent, who believes that Nicki is an older woman ready to retire from teaching. He talks to her about several annuities that she could buy that would guarantee her an annual fixed income. The annuities are as follows in the popup? window: LOADING... .

If Nicki could earn 8 percent on her money by placing it in a savings? account, should she place it instead in any of the? annuities? Which? ones, if? any? Why?

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Part 1

a. What rate of return could Nicki earn on her money if she place it in annuity A with ?$8,000 payment per year and 12 years? duration? enter your response here?% ?(Round to two decimal? places.)

Part 2

If Nicki could earn 8 percent on her money by placing it in a savings? account, should she place it instead in annuity? A? ?(Select the best choice? below.)

A.No. Nicki should not place her money in annuity A because the expected rate of return on the annuity is smaller than the one on the savings account.

B.Yes. Nicki should place her money in annuity A because the expected rate of return on the annuity is greater than the one on the savings account.

b. What rate of return could Nicki earn on her money if she place it in annuity annuity B with ?$8,500 payment per year and 22 years? duration? ?% ?(Round to two decimal? places.)

If Nicki could earn 8 percent on her money by placing it in a savings? account, should she place it instead in annuity? B? ?(Select the best choice? below.)

A. No. Nicki should not place her money in annuity B because the expected rate of return on the annuity is smaller than the one on the savings account.

B.Yes. Nicki should place her money in annuity B because the expected rate of return on

c. What rate of return could Nicki earn on her money if she place it in annuity annuity C with ?$6,500 payment per year and 16 years? duration? % ?(Round to two decimal? places.)

If Nicki could earn 8 percent on her money by placing it in a savings? account, should she place it instead in annuity? C? ?(Select the best choice? below.)

A.No. Nicki should not place her money in annuity C because the expected rate of return on the annuity is smaller than the one on the savings account.

B.Yes. Nicki should place her money in annuity C because the expected rate of return on the annuity is greater than the one on the savings account.

Reference no: EM133430506

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