You just paid $361,000 for an annuity that will pay you and your heirs $12,300 a year forever....
Question:
You just paid $361,000 for an annuity that will pay you and your heirs $12,300 a year forever. What rate of return are you earning on this policy?
Value of an annuity:
An annuity is a series of equal cash flows that an individual or a firm expects to earn or pay from one period to the next at regular time intervals. A perpetuity is defined as an annuity that is expected to occur forever. The value of an annuity is calculated based on the time value of money concept. According to the time value of money, a dollar today is worth more than a dollar in future and for these calculations the key factors to consider are the interest rate and the time period of the investment.
Answer and Explanation:
Become a Study.com member to unlock this answer! Create your account
View this answerSee full answer below.
Ask a question
Our experts can answer your tough homework and study questions.
Ask a question Ask a questionSearch Answers
Learn more about this topic:
Get access to this video and our entire Q&A library
What is a Perpetuity? - Definition & Formula
from
Chapter 6 / Lesson 4
12K
Learn what perpetuity is in finance. Understand the meaning and definition of perpetuity, its characteristics and how its present value can be found using a formula.
Related to this Question
- You just paid $375,000 for an annuity that will pay you and your heirs $11,200 a year forever. What rate of return are you earning on this policy?
- You just paid $750,000 for an annuity that will pay you and your heirs $36,000 a year forever. What rate of return are you earning on this policy?
- You just paid $346,000 for an annuity that will pay you and your heirs $11, 600 a year forever. What rate of return are you earning on this policy? A. 3.50 percent B. 3.35 percent C. 3.10 percent D.
- You just paid $338,000 for an annuity that will pay you and your heirs $11, 700 a year forever. What rate of return are you earning on this policy? A. 3.21 percent B. 3.80 percent C. 3.52 percent D.
- You just paid $356,000 for a policy that will pay you and your heirs $12,800 a year forever. What rate of return are you earning on this policy?
- You just paid $351,000 for a policy that will pay you and your heirs $12,300 a year forever. What rate of return are you earning on this policy?
- You just paid $348,000 for a policy that will pay you and your heirs $12,000 a year forever. What rate of return are you earning on this policy?
- You just paid $354,000 for a policy that will pay you and your heirs $12,600 a year forever. What rate of return are you earning on this policy? a. 3.56% b. 3.44% c. 3.83% d. 3.32% e. 1.97%
- You just paid $358,000 for a policy that will pay you and your heirs $13,000 a year forever. What rate of return are you earning on this policy?
- You just paid $352,000 for a policy that will pay you and your heirs $12,400 a year forever. What rate of return are you earning on this policy?
- Martina Scott just paid $333,000 for an annuity that will pay her and her heirs $12,600 a year forever. What rate of return is she earning on this policy?
- An annuity is set up that will pay $3,900 per year for 15 years. What is the present value of this annuity given that the discount rate is 6%?
- An annuity is set up that will pay $1,400 per year for 12 years. What is the present value of this annuity given that the discount rate is 9%?
- An annuity is set up that will pay $1,600 per year for nine years. What is the present value (PV) of this annuity given that the discount rate is 6%? A.$6,530 B.$10,883 C.$15,236 D.$13,060
- An annuity is set up that will pay $600 per year for 15 years. What is the present value of this annuity given that the discount rate is 6%?
- An annuity is set up that will pay $1,600 per year for ten years. What is the present value (PV) of this annuity given that the discount rate is 5?%?
- An annuity is set up that will pay $1500 per year for ten years. What is the present value (PV)of this annuity given that the discount rate is 9%? A) $5776 B) $9626 C) $11,551 D) $13,476
- An annuity is set up that will pay $1800 per year for 12 years. What is the present value of this annuity given that the discount rate is 8%?
- An annuity is set up that will pay $1,800 per year for 8 years. What is the present value of this annuity given that the discount rate is 8%?
- An annuity is set up that will pay $1,500 per year for ten years. What is the present value (PV) of this annuity given that the discount rate is 6%? a. $8,441 b. $11,040 c. $14,721 d. $19,771
- An annuity is set up that will pay $900 per year for 12 years. What is the present value of this annuity given that the discount rate is 6%?
- An annuity is set up that will pay $2,800 per year for 20 years. What is the present value of this annuity given that the discount rate is 8%?
- An annuity pays $10 per year for 98 years. What is the present value (PV)of this annuity given that the discount rate is 7%? A)$85.60 B)$171.20 C)$142.67 D)$199.74
- An annuity pays $75 per year for 50 years. What is the present value of this annuity given that the discount rate is 8%?
- An annuity pays $50 per year for 60 years. What is the present value of this annuity given that the discount rate is 8%?
- An annuity pays $75 per year for 20 years. What is the future value of this annuity at the end of those 20 years, given that the discount rate is 9%?
- An annuity pays $45 per year for 20 years. What is the future value of this annuity at the end of those 20 years, given that the discount rate is 8%?
- An annuity pays $47 per year for 22 years. What is the future value (FV)of this annuity at the end of those 22 years, given that the discount rate is 8%? A) $1563.88 B) $3127.76 C) $3649.06 D) $2606.47
- An annuity pays $60 per year for 25 years. What is the future value of this annuity at the end of those 25 years, given that the discount rate is 6%?
- An annuity pays $13 per year for 53 years. What is the future value (FV)of this annuity at the end of that 53 years given that the discount rate is 9%? A) $8258.91 B) $16,517.82 C) $19,270.79 D) $13,764.85
- An annuity pays $10 per year for 50 years. What is the future value (FV) of this annuity at the end of that 50 years given that the discount rate is 5%? a. $182.56 b. $525.00 c. $845.25 d. $2,093.48
- An annuity pays $25 per year for 40 years. What is the future value of this annuity at the end of that 40 years given that the discount rate is 9%?
- An annuity pays $20 per year for 50 years. What is the future value of this annuity at the end of that 50 years, given that the discount rate is 6%?
- You are considering buying a 10 year annuity for $750. The rate of return is 6.5%. What annual cash flow from the annuity will you receive? A. $70.77 B. $102.96 C. $104.33 D. $114.31 E. $129.27
- You have an annuity with expected $50,000 payments each year for 20 years. If the discount rate is 8%, what is the present value of this annuity? a. $351,677 b. $500,101 c. $1,000,000 d. $490,907 e. $367,056
- You just paid $525,000 for a security that will pay you and your heirs $25,000 a year forever. What rate of return will you earn?
- You just paid $385,345 for a policy that will pay you and your heirs $10,503 a year forever. What rate of return are you earning on this policy? (Give rate in percents, not in decimals.)
- You just paid $350,000 for a policy that will pay you and your heirs $12,00 a year forever. What is the rate of return are you earning on this policy? A. 25 percent B. 3.33 percent C. 3.43 percent D. 3.50 percent E. 3.67 percent
- You just paid $345,000 for a policy that will pay you and your heirs $11,700 a year forever. What rate of return are you earning on this policy? a. 3.39 percent b. 3.64 percent c. 1.87 percent d. 3.28 percent e. 3.18 percent
- How much would you be willing to pay for a 10-year ordinary annuity if the payments are $500 per year and the rate of return is 6.25% annually? a) $3,423 b) $3,637 c) $3,864 d) $4,132
- Buying a life insurance annuity will pay you $2000 per year for 20 years and the interest rate is 3%. How much should you pay for this annuity today (its Present Value)?
- The discount rate is 5%. How much would you pay for a 10-year annuity due that pays $100 per year? A. $811 B. $899 C. $956 D. $1,194 E. $1,895
- What is the present value of an annuity of $798 a year for 13 years at a 11 percent discount rate?
- What is the present value of an annuity of $487 a year for 5 years at a 9 percent discount rate?
- You just paid $350,000 for a policy that will pay you and your heirs $12.000 a year forever. What rate of return are you earning on this policy? 3.25 percent 3.33 percent 3.43 percent 3.50 percent 3.67 percent
- A 16-year annuity due pays $800 per year and interest rates are 12%, what's the present value of the annuity due?
- You buy into an annuity with $1,000 a year for 8 years. How much will your investment be worth 8 years from now if the annuity is getting a 4% rate of return?
- Annuity - what is the future value of a $900 annuity payment over five years if interest rates are 8 percent?
- An insurance company offers you an end of year annuity of $48,000 per year for the next 20 years. They claim your return on the annuity is 9 percent. What should you be willing to pay today for this a
- What is the value 7 years from now of a 4-year annuity, with the first 1,600 payment being made 1 year from today if the expected return is APY=10%?
- What is the present value of an annuity of $1,200 received at the end of each year for seven years? Assume a discount rate of 11%.
- What is the present value of an annuity that pays $5,000 at the end of each year for 12 years, assuming a 15% rate?
- What is the future value 10 years from now of an annuity of $350 per year for each of the next 7 years if the discount rate is 10% per year?
- If the interest rate is 8 percent, what is the 4-year annuity factor?
- What is the present value of a 3-year annuity of $220 if the discount rate is 6%?
- An insurance company offers you an end of year annuity of $48,000 per year for the next 20 years. They claim your return on the annuity is 9 percent. What should you be willing to pay today for this annuity? a. $429,600 b. $438,144 c. $408,672 d. $398,144
- An annuity will pay you $12,000 per year for 20 years. What is the PV of this annuity if your cost of capital is 7%? a) $224,299 b) $240,000 c) $127,128 d) $491,946 e) $238,245
- What is the present value of an annuity due that pays $2,000 per year for 4 years, assuming the actual discount rate is 7%?
- What is the value today of a 15-year annuity that pays $650 a year? The annuity's first payment occurs six years from today. The annual interest rate is 11 percent for Years 1 through 5, and 13 percen
- What is the value today of a 15-year annuity that pays $750 a year? The annuity's first payment occurs six years from today. The annual interest rate is 9%for years 1 through 5, and 12% thereafter.
- What is the future value of a $700 annuity payment over six years, if the interest rate is 10 percent?
- You will receive $50,165 per year for the next 15 years from your annuity plan. What is the present value of the annuity payments if your opportunity cost is 9%?
- You will receive $50,165 per year for the next 17 years from your annuity plan. What is the present value of the annuity payments if your opportunity cost is 10%?
- What is the present value of a seven-year $1,000 annuity if the first $1,000 payment is made four years from today and the discount rate is 15%?
- What is the present value of a seven-year $1000 annuity if the first $1000 payment is made four years from today and the discount rate is 15%?
- If the PV of $10 a year for three years is $25.36, what is the three-year annuity factor?
- What is the value today of a 15-year annuity that pays $720 a year? The annuity's first payment occurs six years from today. The annual interest rate is 12% for Years 1 through 5, and 14% thereafter.
- What is the value today of a 15-year annuity that pays $750 a year? The annuity's first payment occurs six years from today. The annual interest rate is 12 percent for Years 1 through 5, and 14 percen
- What is the value today of a 15-year annuity that pays $640 a year? The annuity's first payment occurs six years from today. The annual interest rate is 10 percent for Years 1 through 5, and 12 percen
- What is the value today of a 15-year annuity that pays $600 a year? The annuity's first payment occurs six years from today. The annual interest rate is 11 percent for Years 1 through 5, and 13 percen
- What is the value today of a 15-year annuity that pays $590 a year? The annuity's first payment occurs six years from today. The annual interest rate is 12 percent for Years 1 through 5, and 14 percen
- What is the value today of a 15-year annuity that pays $720 a year? The annuity's first payment occurs six years from today. The annual interest rate is 12 percent for Years 1 through 5, and 14 percen
- What is the value today of a 15-year annuity that pays $610 a year? The annuity's first payment occurs six years from today. The annual interest rate is 10 percent for Years 1 through 5, and 12 percen
- What is the value today of a 15-year annuity that pays $720 per year? The annuity s first payment occurs six years from today. The annual interest rate is 12 percent for Years 1 through 5, and 14 perc
- What is the value today of a 15-year annuity that pays $560 a year? The annuity's first payment occurs six years from today. The annual interest rate is 12 percent for Years 1 through 5, and 14 percen
- What is the future value of an annuity payment of $6,000 over the next 10 years at an interest rate of 4% per year? a. $90,154.83 b. $93,761.02 c. $28,675.97 d. $32,117.08 e. $72,036.64
- What is the present value of a four-year annuity of $100 per year that begins 2 years from today if the discount rate is 9%? a. $297.22. b. $323.97. c. $356.85. d. $272.68.
- What is the present value of a four-year annuity of $150 per year that begins three years from today if the discount rate is 9%?
- What is the present value of an annuity that pays $5,000 at the beginning of each year for 12 years, assuming a 15% rate?
- What is the value today of a 15-year annuity that pays $630 a year? The annuity's first payment occurs six years from today. The annual interest rate is 11% for years 1 through 5, and 13% thereafter
- What is the value today of a 15-year annuity that pays $730 per year? The annuity's first payment occurs six years from today. The annual interest rate is 10% for Years 1 through 5, and 12% thereafter
- What is the future value of a $500 annuity payment over four years, if interest rates are 8 percent?
- What is the future value of a $610 annuity payment over six years if interest rates are 10 percent?
- What is the future value of an $880 annuity payment over five years if interest rates are 9 percent?
- What is the future value of a $700 annuity payment over six years if interest rates are 10 percent?
- What is the future value of an $800 annuity payment over 6 years if the interest rates are 8 percent?
- What is the future value of a $300 annuity payment over 6 years if the interest rates are 7 percent? A. $450.22 B. $2,518.15 C. $2,145.99 D. $1,926.00
- What is the future value of a $960 annuity payment over five years if interest rates are 9 percent?
- What is the future value of a $500 annuity payment over 8 years if the interest rates are 9 percent? A. $996.28 B. $6,243.78 C. $4,360.00 D. $5,514.24
- What is the future value of a $970 annuity payment over four years if interest rates are 8 percent?
- What is the future value of a $900 annuity payment over five years, if interest rates are 8 percent?
- What is the future value of a $900 annuity payment over five years if interest rates are 9 percent?
- What is the future value of a $700 annuity payment over 10 years if the interest rates are 7 percent?
- What is the future value of a $1,000 annuity payment over four years if interest rates are 8 percent?
- Consider a two-year annuity with annual payments of $500. What is the fair price for this annuity?
- What is the value of a 30-year annuity that pays $2500 a year? The annuity s first payment will be received on year 11. Also, assume that the annual interest rate is 4 percent for years 1 through 10 and 5 percent thereafter.
- What's the present value of a $610 annuity payment over six years if interest rates are 10 percent?
- What is the present value of a $1,800 annuity payment over 8 years if interest rates are 8 percent? a) $10,343.95 b) $11,244.40 c) $972.48 d) $3,331.67
- What is the present value of a $820 annuity payment over five years if interest rates are 9 percent?
- What is the present value of a $800 annuity payment over 5 years if interest rates are 10 percent?
Explore our homework questions and answers library
Browse
by subject