Calculate the following: (LG 15-2) a. What is the amount of the annuity purchase required if you

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Calculate the following: (LG 15-2)

a. What is the amount of the annuity purchase required if you wish to receive a fixed payment of $240,000 for 20 years? Assume that the annuity will earn 7 percent per year.

b. Calculate the annual cash flows from a $2.5 million, 20-year fixedpayment annuity earning a guaranteed return of 7 percent per year if payments are to begin at the end of the current year.

c. Calculate the annual cash flows from a $2.5 million, 20-year fixedpayment annuity earning a guaranteed return of 7 percent per year if payments are to begin at the end of year 6.

page 504 LO.1

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Financial Markets And Institutions

ISBN: 9781259919718

7th Edition

Authors: Anthony Saunders, Marcia Cornett

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