Question
a. Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 25-year annuity is $1.8 million and the
a. | Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 25-year annuity is $1.8 million and the annuity earns a guaranteed annual return of 12 percent. The payments are to begin at the end of the current year. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16)) |
Annual cash flows | $ |
b. | Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 25-year annuity is $1.8 million and the annuity earns a guaranteed annual return of 12 percent. The payments are to begin at the end of five years. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16)) |
Annual cash flows | $ |
c. | What is the amount of the annuity purchase required if you wish to receive a fixed payment of $210,000 for 25 years? Assume that the annuity will earn 12 percent per year. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16)) |
Present value | $ |
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