Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

35) Fill in the missing annual interest rates in the following table for an ordinary annuity stream Annual Interest Rate Future Value Annuity Present Value

image text in transcribed
35) Fill in the missing annual interest rates in the following table for an ordinary annuity stream Annual Interest Rate Future Value Annuity Present Value Number of Payments or Years 10 20 30 100 0 $25,000.00 $500.00 S346.97 $1,946.73 $400.00 $3,680.04 0 $20,000.00 0 0 $1,044,010.06 36) What are you getting in terms of interest rate if you are willing to pay $15,000 today for an annual stream of payments of $2,000 for the next twenty years? The next forty years ? The next one hundred years? Forever? 37) A local government is about to run a lottery, but does not want to be involved in the payoff if a winner picks an annuity payoff. The government contracts with a trust to pay the lump-sum payout to the trust and have the trust (probably a local bank) pay the annual payments. The first winner of the lottery chooses the annuity and will receive $150,000 a year for the next twenty-five years. The local goverment will give the trust $2,000,000 to pay for this annuity. What investment rate must the trust carn to break even on this arrangement? 38) A lottery ticket states that you will receive $250 every year for the next ten years E 77F S 7 F8 F9 F10

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Options Futures And Other Derivatives

Authors: John Hull

11th Global Edition

1292410655, 9781292410654

More Books

Students also viewed these Finance questions