Question
Big Bucks offers its customers to invest their money in exchange for cash payments that take the form of a 4-year annuity. Customers who buy
Big Bucks offers its customers to invest their money in exchange for cash payments that take the form of a 4-year annuity. Customers who buy such annuity would in return receive eight semiannual cash payments in the amount of $8,200 each. This annuity investment would take place in 7 years, and the first cash payment would be received in 7.5 years.
a. The annuity's rate of return is 14 percent, compounded monthly. If you buy such annuity five years from today, at that time its value will equal $___. (Do not round intermediate calculations. Round your final answer to 2 decimal places, e.g., 32.16.)
b. Assume instead that the annuity's rate of return is 14 percent, compounded monthly. If you buy such annuity three years from today its value at that time will equal $___. (Do not round intermediate calculations. Round your final answer to 2 decimal places, e.g., 32.16.)
c. If the annuity's rate of return is 14 percent, compounded monthly, then today you would need to pay $___ for such annuity investment. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
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