Suppose you just bought a 15-year annuity of $6,800 per year at the current inte
ID: 2769073 • Letter: S
Question
Suppose you just bought a 15-year annuity of $6,800 per year at the current interest rate of 11 percent per year.
What if interest rates suddenly rise to 16 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Suppose you just bought a 15-year annuity of $6,800 per year at the current interest rate of 11 percent per year.
What is the value of your annuity today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)Explanation / Answer
What is the value of your annuity today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Present value $ Annuity factor 11% value of your annuity today value of your annuity today $6,800.00 7.190869576 $48,897.91 hat is the present value if interest rates suddenly drop to 6 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Present value $ Annuity factor 6% value of your annuity today value of your annuity today $6,800.00 9.712248988 $66,043.29 What is the present value if interest rates suddenly rise to 16 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Present value $ Annuity factor 16% value of your annuity today value of your annuity today $6,800.00 5.575456163 37913.10191
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