Homework help
P6-16 (similar to) Question Help (Annuity interest rate) Your folks just called and would like some advice from you. An insurance agent just called them and offered them the opportunity to purchase an annuity for $11,983.73 that will pay them $2,000 per year for 10 years. They don't have the slightest idea what return they would be making on their investment of $11,983.73. What rate of return would they be earning? The annual rate of return your folks would be earning on their investment is nothing%. (Round to two decimal places.) P6-13 (similar to) Question Help (Annuity number of periods) How long will it take to pay off a loan of $50,000 at an annual rate of 8 percent compounded monthly if you make monthly payments of $650? Use five decimal places for the monthly percentage rate in your calculations. The number of years it takes to pay off the loan is nothing years. (Round to one decimal place.) partial credit,P6-5 (similar to) Question Help (Related to Checkpoint 6.1) (Annuity payments) Mr. Bill S. Preston, Esq., purchased a new house for $130,000. He paid $10,000 upfront and agreed to pay the rest over the next 25 years in 25 equal annual payments that include principal payments plus 12 percent compound interest on the unpaid balance. What will these equal payments be? a. Mr. Bill S. Preston, Esq., purchased a new house for $130,000 and paid $10,000 upfront. How much does he need to borrow to purchase the house? $nothing (Round to the nearest dollar.) partial credit,P6-17 (similar to) Question Help (Related to Checkpoint 6.1) (Loan amortization) On December 31, Beth Klemkosky bought a yacht for $110,000. She paid $18,000 down and agreed to pay the balance in 11 equal annual installments that include both the principal and 7 percent interest on the declining balance. How big will the annual payments be? a. On December 31, Beth Klemkosky bought a yacht for $110,000 and paid $18,000 down, how much does she need to borrow to purchase the yacht? $nothing (Round to the nearest dollar.) incorrect,P6-28 (similar to) Question Help (Related to Checkpoint 6.2) (Present value of annuity payments) The state lottery's million-dollar payout provides for $1.5 million to be paid in 25 installments of $60,000 per payment. The first $60,000 payment is made immediately, and the 24 remaining $60,000 payments occur at the end of each of the next 24 years. If 9 percent is the discount rate, what is the present value of this stream of cash flows? If 18 percent is the discount rate, what is the present value of the cash flows? a. If 9 percent is the discount rate, the present value of the annuity due is $nothing. (Round to the nearest cent.) P6-34 (similar to) Question Help (Related to Checkpoint 6.1) (Annuity payments) Lisa Simpson wants to have $1,400,000 in 40 years by making equal annual end-of-the-year deposits into a tax-deferred account paying 8.75 percent annually. What must Lisa's annual deposit be? The amount of Lisa's annual deposit must be $nothing. (Round to the nearest cent.) (similar to) Question Help (Related to Checkpoint 6.5) (Present value of a growing perpetuity) What is the present value of a perpetual stream of cash flows that pays $8,000 at the end of year one and the annual cash flows grow at a rate of 2% per year indefinitely, if the appropriate discount rate is 13%? What if the appropriate discount rate is 11%? a. If the appropriate discount rate is 13%, the present value of the growing perpetuity is $nothing. (Round to the nearest cent.) P6-50 (similar to) Question Help (Present value of an uneven stream of payments) You are given three investment alternatives to analyze. The cash flows from these three investments are as follows: Investment End of Year A B C 1 $ 1,000 $ 2,000 $ 6,000 2 2,000 2,000 6,000 3 3,000 2,000 (6,000) 4 (4,000) 2,000 (6,000) 5 4,000 5,000 16,000 What is the present value of each of these three investments if the appropriate discount rate is 14 percent? a. What is the present value of investment A at an annual discount rate of 14 percent? $nothing (Round to the nearest cent.)