Question
Big Bucks offers its customers the opportunity to deposit their money in return for cash payments in the form of a 4-year annual payment. Customers
Big Bucks offers its customers the opportunity to deposit their money in return for cash payments in the form of a 4-year annual payment. Customers who purchase such an annuity will receive in return eight six-month cash payments of $13,000 each. This annual investment would be realized in 7 years and the first cash payment would be received in 7.5 years. |
A. | The rate of return on annual income is 15 percent compounded monthly. If you buy such a pension five years from now, then its value will be equal to ___$. (Do not round up intermediate calculations. Round your final answer to 2 decimal places, eg 32.16.) |
B. | Assume instead that the rate of return on annual income is 15 percent compounded monthly. If you buy such a pension three years from today, its value at that time would be $___. (Do not round up intermediate calculations. Round your final answer to 2 decimal places, eg 32.16.) |
C. | If the rate of return on annuity is 15 percent compounded monthly, then you would have to pay $___ today for such an annuity investment. (Do not round up intermediate calculations and round your answer to 2 decimal places, eg 32.16.) |
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