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Hi guys I'm having difficulties with annuities - I do not understand the relationship between PV & FV of compounded interest rate and PV & FV of annuities, any idea? It doesnt matter if you can answer in Vietnamese. Cheer
In order to help me clarify the problems, can someone please help me solve these 2 questions below and explain in detail as well as how to recognise the type of question of Annuities T.T
1- Maybepay Life Insurance Co. is selling a perpetual annuity contract that pays $2000 monthly. The contract currently sells for $130.000. What is the monthly return on this investment vehicle? What is the APR? What is the effective annual return
2- What is the present value of $920 per year, at a discount rate of 10%, if the first payment is received 5 years from now and the last payment is received 20 years from now? Hint: answer= 7,197,81 and 4,916,20
3- you have your chooice of two investment accounts. Investment A is a 10-year annuity that features end-of-month $1500 payments and has an interest rate of 9 percent compounded monthly. Investment B is a 7 percent annually compounded lump-sum investment, also good for 10 years. how much money would you need to invest in B today for it to be worth as much as Investment A 10 years from now?
Related to question 3: Can you please explain what is the term lump-sum in the sentence of "7 percent annually compounded lump-sum"
Any idea appreciated
In order to help me clarify the problems, can someone please help me solve these 2 questions below and explain in detail as well as how to recognise the type of question of Annuities T.T
1- Maybepay Life Insurance Co. is selling a perpetual annuity contract that pays $2000 monthly. The contract currently sells for $130.000. What is the monthly return on this investment vehicle? What is the APR? What is the effective annual return
2- What is the present value of $920 per year, at a discount rate of 10%, if the first payment is received 5 years from now and the last payment is received 20 years from now? Hint: answer= 7,197,81 and 4,916,20
3- you have your chooice of two investment accounts. Investment A is a 10-year annuity that features end-of-month $1500 payments and has an interest rate of 9 percent compounded monthly. Investment B is a 7 percent annually compounded lump-sum investment, also good for 10 years. how much money would you need to invest in B today for it to be worth as much as Investment A 10 years from now?
Related to question 3: Can you please explain what is the term lump-sum in the sentence of "7 percent annually compounded lump-sum"
Any idea appreciated
