FREE Trial
Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Abel purchased a 10-year annuity that has an interest rate of 5% compounded semiannually and which will provide him with payments at the end of

Abel purchased a 10-year annuity that has an interest rate of 5% compounded semiannually and which will provide him with payments at the end of every six months.
The first payment received is $1000 and it increased by 2% thereafter, every six months.
(i) How much did he pay for annuity?
(ii) What was the total interest earned?

Step by Step Solution

★★★★★

3.41 Rating (160 Votes )

There are 3 Steps involved in it

Step: 1

Req a Period Cashreceived PVf at 250 Present value 1 1000 097561 9756098 2 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

Fundamentals of Engineering Economics

Fundamentals of Engineering Economics

Authors: Chan S. Park

3rd edition

132775425, 132775427, 978-0132775427

More Books

Students also viewed these Economics questions

Question

★★★★★
Payments of $1240 at the end of every six months will pay off the balance owed on a loan in 9 years. If the interest rate on the loan is 5.9% compounded semiannually, what is the current balance on...

Answered: 1 week ago

Question

★★★★★
A company borrowed $180,000 at an interest rate of 9% compounded annually over six years. The loan will be repaid in installments at the end of each year according to the accompanying repayment...

Answered: 1 week ago

Question

★★★★★
A $10 million, 5-year loan bears an interest rate of 7 percent. The loan repayment plan calls for five annual end-of-year payments. Each payment is to include an equal amount of principal repayment...

Answered: 1 week ago

Question

★★★★★
A stock is trading at $70. You believe there is a 70% chance the price of the stock will increase by 10% over the next 3 months. You believe there is a 10% chance the stock will drop by 10%, and you...

Answered: 1 week ago

Question

★★★★★
A country has two regions, the North and the South, which are identical in all respects except the hourly wage and the number of workers. The demand for labor in each region is: (a) What is the wage...

Answered: 1 week ago

Question

★★★★★
In which of these outcomes does the addition theorem apply? In which does the multiplication theorem apply? Circle "AT" for addition theorem or "MT" for multiplication theorem. Outcome a. Winning the...

Answered: 1 week ago

Question

★★★★★
Habit Survey Interview three people who have changed a bad habit into a healthy habit. How did they achieve their success? How long did it take? Did they ever have a relapse? If so, what did they...

Answered: 1 week ago

Question

★★★★★
Detroit Central Hospital is trying to improve its image by providing a positive experience for its patients and their relatives. Part of the image program involves providing tasty, inviting patient...

Answered: 1 week ago

Question

★★★★★
Use the table for the question(s) below. Consider the following two projects with cash flows in \$: The internal rate of return (IRR) for project A is closest to: A. 21.6%. B. 23.3%. C. 7.7%. D. 42.9%

Answered: 1 week ago

Question

★★★★★
Opus, Incorporated, owns 90 percent of Bloom Company. On December 31, 2012, Opus acquires half of Bloom's $500,000 outstanding bonds. These bonds had been sold on the open market on January 1, 2010,...

Answered: 1 week ago

Question

★★★★★
A specific intent to defraud does not include which of the following: Group of answer choices The intent to induce the victim to act to his or her detriment. The intent to conspire with another to...

Answered: 1 week ago

Question

★★★★★
Using a sample space S = {1, 2, 3, 4} with Pr(i) = 1/4 and A = {1, 2} find examples of events B,C and D where Pr(A | B) Pr(A). Let E = {1, 2, 3}, F = {2,...

Answered: 1 week ago

Question

★★★★★
Question 2 Bramble Ltd. is authorized to issue 10,000, $6 noncumulative preferred shares. On January 13, it issued 2,700 preferred shares for $85 cash per share. Prepare the journal entry to record...

Answered: 1 week ago

Question

★★★★★
Mackenzie Corp. is preparing the December 31, 2023, year-end financial statements. Following are selected unadjusted account balances: Estimated warranty liability $ 6,650 Income tax expense Mortgage...

Answered: 1 week ago

Question

★★★★★
A driver in a moving car applies the brakes. The car slows to a final speed of 2.95 m/s over a distance of 40.0 m and a time interval of 7.70 s. The acceleration while braking is approximately...

Answered: 1 week ago

Question

★★★★★
2. (40 pts) The Howard County Hospital is assessing its Emergency Department (ED) capacity so it knows how to expand as the county population grows. The hospital has the following information about...

Answered: 1 week ago

Question

★★★★★
Which of the following would most likely be the reason for an unfavorable labor efficiency variance O 9& 11 O 1, 2, 9 &11 O None of the answer choices is correct. Question 6 If a company purchases...

Answered: 1 week ago

Question

★★★★★
Explain the differences and similarities between fringe benefits and salary as forms of compensation.

Answered: 1 week ago

Question

★★★★★
Scottsdale Print Shop expects to have an annual taxable income of $300,000 from its regular business over the next two years. The company is also considering the proposed acquisition of a new...

Answered: 1 week ago

Question

★★★★★
You acquire a grinder priced at $65,000 by trading in a similar grinder and paying cash for the remaining balance. Assuming that the tradein allowance is $11,000 and the book value of the asset...

Answered: 1 week ago

Question

★★★★★
Belmont Paving Company purchased a hauling truck on January 8, 2012, at a cost of $37,000. The truck has a useful life of eight years with an estimated salvage value of $6,000. The straightline...

Answered: 1 week ago

Question

★★★★★
The MainStay Investments of New York Life Investment Management survey of respondents between the ages of 26 to 82 indicated that 66% of seniors, 61% of baby boomers, and 58% of Generation X expect...

Answered: 1 week ago

Question

★★★★★
The Emerging Workforce Study conducted by Harris Interactive on behalf of Spherion, a leader in providing value-added staffing, recruiting, and workforce solutions, utilized a random sample of 502...

Answered: 1 week ago

Question

★★★★★
Neverslip, Inc., produces belts for industrial use. As part of its continuous process-improvement program, Neverslip has decided to monitor on-time shipments of its products. Suppose a random sample...

Answered: 1 week ago

Previous Question Next Question