Question
a. What is the amount of the annuity purchase required if you wish to receive a fixed payment of $200,000 for 20 years? Assume that
a.What is the amount of the annuity purchase required if you wish to receive a fixed payment of $200,000 for 20 years? Assume that the annuity will earn 12 percent per year.
b.Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 20-year annuity is $1.1 million and the annuity earns a guaranteed annual return of 12 percent. The payments are to begin at the end of the current year.
c.Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 20-year annuity is $1.1 million and the annuity earns a guaranteed annual return of 12 percent. The payments are to begin at the end of five years.
(For all requirements, do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16))
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started