Question
Cooley Landscaping Company needs to borrow $29,000 for a new front-end dirt loader. The bank is willing to loan the funds at 7.5% interest with
Cooley Landscaping Company needs to borrow $29,000 for a new front-end dirt loader. The bank is willing to loan the funds at 7.5% interest with annual payments at the end of the year for the next 9 years. What is the annual payment on this loan for Cooley Landscaping?
County Ranch Insurance Company wants to offer a guaranteed annuity in units of $700, payable at the end of each year for 15 years. The company has a strong investment record and can consistently earn 9% on its investments after taxes. If the company wants to make 1% on this contract, what price should it set on it? Use 8% as the discount rate. Assume it is an ordinary annuity and the price is the same thing as present value.
What price should the company set on the annuity contract?
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