Q1 Curly’s Life Insurance Co. is trying to sell you an investment policy that wi
ID: 2613647 • Letter: Q
Question
Q1
Curly’s Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $44,000 per year forever. Assume the required return on this investment is 6.9 percent.
How much will you pay for the policy?
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Q2:
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Q3
Assume you deposit $5,200 at the end of each year into an account paying 10 percent interest.
How much money will you have in the account in 17 years?
How much will you have if you make deposits for 34 years?
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Q4
Beginning three months from now, you want to be able to withdraw $4,400 each quarter from your bank account to cover college expenses over the next four years.
If the account pays .84 percent interest per quarter, how much do you need to have in your bank account today to meet your expense needs over the next four years?
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Q5:
First National Bank charges 10.5 percent compounded monthly on its business loans. First United Bank charges 10.7 percent compounded semiannually.
Calculate the EAR for each bank
First National Bank%
First United Bank%
Q6
Investment X offers to pay you $6,500 per year for 9 years, whereas Investment Y offers to pay you $8,900 per year for 5 years.
If the discount rate is 5 percent, what is the present value of these cash flows?
nvestment X$
Investment Y$
b)
If the discount rate is 23 percent, what is the present value of these cash flows?
b)
Q7:
Solve for the unknown number of years in each of the following
Q1
Curly’s Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $44,000 per year forever. Assume the required return on this investment is 6.9 percent.
Explanation / Answer
As per Chegg Guidelins we answer one question per post. But I have solved 2 questions. There is word linmit while submitting answers. So please post remaining questions in separate post Q1 Amount per year 44,000.00 Rate of return 6.90% Value of Policy = 44,000/6.90% Value of Policy = $637,681.16 Q3 Amount each Year 5,200.00 Rate of interest 10% Amount after 17 Years 210,832.45 Amount after 34 Years 1,276,478.83 Year Opening Balance Interest(Opening bal*Intt rate) Deposit Closing Balance(Op bal + Intt + Invt) 1.000 - - 5,200.00 5,200.00 2.000 5,200.00 520.00 5,200.00 10,920.00 3.000 10,920.00 1,092.00 5,200.00 17,212.00 4.000 17,212.00 1,721.20 5,200.00 24,133.20 5.000 24,133.20 2,413.32 5,200.00 31,746.52 6.000 31,746.52 3,174.65 5,200.00 40,121.17 7.000 40,121.17 4,012.12 5,200.00 49,333.29 8.000 49,333.29 4,933.33 5,200.00 59,466.62 9.000 59,466.62 5,946.66 5,200.00 70,613.28 10.000 70,613.28 7,061.33 5,200.00 82,874.61 11.000 82,874.61 8,287.46 5,200.00 96,362.07 12.000 96,362.07 9,636.21 5,200.00 111,198.28 13.000 111,198.28 11,119.83 5,200.00 127,518.10 14.000 127,518.10 12,751.81 5,200.00 145,469.91 15.000 145,469.91 14,546.99 5,200.00 165,216.90 16.000 165,216.90 16,521.69 5,200.00 186,938.60 17.000 186,938.60 18,693.86 5,200.00 210,832.45 18.000 210,832.45 21,083.25 5,200.00 237,115.70 19.000 237,115.70 23,711.57 5,200.00 266,027.27 20.000 266,027.27 26,602.73 5,200.00 297,830.00 21.000 297,830.00 29,783.00 5,200.00 332,813.00 22.000 332,813.00 33,281.30 5,200.00 371,294.30 23.000 371,294.30 37,129.43 5,200.00 413,623.73 24.000 413,623.73 41,362.37 5,200.00 460,186.10 25.000 460,186.10 46,018.61 5,200.00 511,404.71 26.000 511,404.71 51,140.47 5,200.00 567,745.18 27.000 567,745.18 56,774.52 5,200.00 629,719.70 28.000 629,719.70 62,971.97 5,200.00 697,891.67 29.000 697,891.67 69,789.17 5,200.00 772,880.83 30.000 772,880.83 77,288.08 5,200.00 855,368.92 31.000 855,368.92 85,536.89 5,200.00 946,105.81 32.000 946,105.81 94,610.58 5,200.00 1,045,916.39 33.000 1,045,916.39 104,591.64 5,200.00 1,155,708.03 34.000 1,155,708.03 115,570.80 5,200.00 1,276,478.83
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