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Please draw cash flow diagrams for each question!! (12 points) An investment advisor tells you that he can sell you an annuity that will generate
Please draw cash flow diagrams for each question!!
- (12 points) An investment advisor tells you that he can sell you an annuity that will generate $400 every quarter (i.e., 3 months) for 6 years starting 3 months from the day you purchase the annuity. Use a nominal 12% per year rate, compounded quarterly.The investment advisor asks for $7,500, which includes his fee of $200. Is this a good deal for you?In other words, what is the present worth of the annuity?
- What single amount paid at the beginning of the first year is equivalent to the series of unequal payments in #1, with an interest rate of 8%?
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