Question
Problem 6-5 - 1) Julia Baker died, leaving to her husband Alan an insurance policy contract that provides that the beneficiary (Alan) can choose any
Problem 6-5 -
1) Julia Baker died, leaving to her husband Alan an insurance policy contract that provides that the beneficiary (Alan) can choose any one of the following four options. Money is worth 2.50% per quarter, compounded quarterly. Compute Present value if: A) $57,970 immediate cash. b)$4,060 every 3 months payable at the end of each quarter for 5 years C)$19,910 immediate cash and $1,991 every 3 months for 10 years, payable at the beginning of each 3-month period. D)$4,060 every 3 months for 3 years and $1,480 each quarter for the following 25 quarters, all payments payable at the end of each quarter. Which option would you recommend that Alan exercise?
2-What is the amount of the payments that Chris Winslow must make at the end of each of 8 years to accumulate a fund of $91,000 by the end of the 8th year, if the fund earns 8% interest, compounded annually? 3-Alan Hitchcock is 37 years old today and he wishes to accumulate $519,000 by his 57th birthday so he can retire to his summer place on Lake Hopatcong. He wishes to accumulate this amount by making equal deposits on his 37th through his 56th birthdays. What annual deposit must Alan make if the fund will earn 12% interest compounded annually? 3)Alan Hitchcock is 37 years old today and he wishes to accumulate $519,000 by his 57th birthday so he can retire to his summer place on Lake Hopatcong. He wishes to accumulate this amount by making equal deposits on his 37th through his 56th birthdays. What annual deposit must Alan make if the fund will earn 12% interest compounded annually? 4)Candice Ross has $18,600 to invest today at 10% to pay a debt of $53,068. How many years will it take her to accumulate enough to liquidate the debt? 5)
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