7 The Insurance Co is trying to sell you an investment policy that will pay you
ID: 2684549 • Letter: 7
Question
7 The Insurance Co is trying to sell you an investment policy that will pay you and your heirs $12,217 per year forever Suppose the they told you the policy costs $198,704 At what interest rate would this be a fair deal 8 Kelly starting setting aside funds 8 yrs ago to buy some new equipment for her firm She has saved $5,182 each quarter and earned an average rate of return of 8 % How much money does she currently have saved for this purpose 9 G Co has an outstanding loan that calls for equal annual payments of $14,903 over the 10-year life of the loan The original loan amount was $100,000 at an APR of 8 % How much of the third payment is interest 10 How many months it will take to grow your money from $4,730 to $7,028 if you can earn an interest of 5% compounded monthly 11 If you can double your money in 13 yrs, what is the implied annual rate of interest, given that compounded in quarterlyExplanation / Answer
7 The Insurance Co is trying to sell you an investment policy that will pay you and your heirs $12,217 per year forever Suppose the they told you the policy costs $198,704 At what interest rate would this be a fair deal
answer = 6.15%
8 Kelly starting setting aside funds 8 yrs ago to buy some new equipment for her firm She has saved $5,182 each quarter and earned an average rate of return of 8 % How much money does she currently have saved for this purpose
answer = $229,184.47
9 G Co has an outstanding loan that calls for equal annual payments of $14,903 over the 10-year life of the loan The original loan amount was $100,000 at an APR of 8 % How much of the third payment is interest
answer = $6,851.35
10 How many months it will take to grow your money from $4,730 to $7,028 if you can earn an interest of 5% compounded monthly 11 If you can double your money in 13 yrs, what is the implied annual rate of interest, given that compounded in quarterly
answer = 95.23 months
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