Question
You deposit $13,000 annually into a life insurance fund for the next 12 years, after which time you plan to retire. a. If the deposits
You deposit $13,000 annually into a life insurance fund for the next 12 years, after which time you plan to retire. |
a. | If the deposits are made at the beginning of the year and earn an interest rate of 6 percent, what will be the amount in the retirement fund at the end of year 12? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16)) |
Future value | $ |
b. | Instead of a lump sum, you wish to receive annuities for the next 24 years (years 13 through 36). What is the constant annual payment you expect to receive at the beginning of each year if you assume an interest rate of 6 percent during the distribution period? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16)) |
Annual payment | $ |
c. | Repeat parts (a) and (b) above assuming earning rates of 5 percent and 7 percent during the deposit period and earning rates of 5 percent and 7 percent during the distribution period. (Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16)) |
Deposit Period | Value at 12 Years | Distribution Period | Annual payment |
5 percent | $ | 5 percent | $ |
7 percent | $ | ||
7 percent | $ | 5 percent | $ |
7 percent | $ | ||
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started