pts possible (Related to Checkpoint 6.2) (Present value of an ordinary annuity) Nicki Johnson, a sophomore mechanical engineering student, receives a call from an insurance agent who believes that Nicki is an older woman who is ready to retire from teaching. He talks to her about several annuities that she could buy that would guarantee her a fixed annual income. The annuities are as follows: Purchase Price of the Amount of Money Duration of the Annuity Annuity (Att=0) Received Per Year Annuity (Years) A $70,000 $8,500 22 B $40,000 $7,000 12 $70,000 $9,000 16 Nicki could earn 9 percent on her money by placing it in a savings account. Alternatively, she could place it in any of the above annuities. Which annuities in the table above, if any, will earn Nicki a higher retum than investing in the savings account earning 9 percent? a. If Nicki could earn 9 percent on her money, what is the present value of annuity A with $8,500 payments per year and 22 years duration? (Round to the nearest cent.) If Nicki could earn 9 percent on her money by placing it in a svings account, should she place k instead in annuity A? (Select the best choice below.) OA. No. Nicki should not place her money in annuity A because the present value of the annuity is smaller than the initial payment OB. Yes. Nicki should place her monev in annuity A because the present value of the annuity is greater than the initial Click to select your answer(s). REVIEW for Mi.pptx Show All etv A MacBook Pro & 7 - + 8 ( 9 ) O II delete ant who believes that Nicki is an older woman who is ready to retire from teaching. He talks to her about several annuities that she could buy that would guarantee her a fixed annual income. The annuities are as follows: Purchase Price of the Amount of Money Duration of the Annuity Annuity (Att = 0) Received Per Year Annuity (Years) $70,000 $8,500 22 B $40,000 $7,000 12 $70,000 $9,000 16 Nicki could earn 9 percent on her money by placing it in a savings account. Alternatively, she could place it in any of the above annuities. Which annuities in the table above, if any, will earn Nicki a higher retum than investing in the savings account eaming 9 percent? b. W Nicki could earn 9 percent on her money, what is the present value of annuity B with $7,000 payments per year and 12 years duration? (Round to the nearest cent.) If Nicki could eam 9 percent on her money by placing it in a savings account, should she place it instead in annuity B? (Select the best choice below.) O A No. Nicki should not place her money in annuity B because the present value of the annuity is smaller than the initial payment B. Yes. Nicki should place her money in annuity B because the present value of the annuity is greater than the initial Click to select your answers) REVIEW for MLpptx Show All 18 etv A le MacBook Pro & * 7 8 C 9 ) 0 Il + delete U I 0 { [ } ] Purchase Price of the Amount of Money Duration of the Annuity Annuity (Att = 0) Received Per Year Annuity (Years) A $70,000 $8,500 22 B $40,000 $7,000 12 $70,000 $9,000 16 Nicki could eam 9 percent on her money by placing it in a savings account. Alternatively, she could place it in any of the above annuities. Which annuities in the table above, if any, will earn Nicki a higher return than investing in the savings account eaming 9 percent? c. If Nicki could earn 9 percent on her money, what is the present value of annuity C with $9,000 payments per year and 16 years duration? (Round to the nearest cent.) It Nicki could eam 9 percent on her money by placing it in a savings account, should she place it instead in annuity C? (Select the best choice below.) O A Yes. Nicki should place her money in annuity C becaus the present value of the annuity is greater than the initial payment. OB. No. Nicki should not place her money in annuity C because the present value of the annuity is smaller than the Click to select your answer(s). REVIEW for Mi pptx Show All X MacBook Pro & * + 7 ( 9 8 ) 0 Il delete o O { [ } ] J L