Calculate the annual cash flows (annuity payments) from a fixed-payment annuity
ID: 2801535 • Letter: C
Question
Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 15-year annuity is $1.6 million and the annuity earns a guaranteed annual return of 13 percent. The payments are to begin at the end of the current year. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))
Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 15-year annuity is $1.6 million and the annuity earns a guaranteed annual return of 13 percent. The payments are to begin at the end of five years. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))
What is the amount of the annuity purchase required if you wish to receive a fixed payment of $260,000 for 15 years? Assume that the annuity will earn 13 percent per year. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))
a.Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 15-year annuity is $1.6 million and the annuity earns a guaranteed annual return of 13 percent. The payments are to begin at the end of the current year. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))
Explanation / Answer
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Annual cash flow (P) PVA÷([1-(1÷(1+r)^n)]÷r) Here, 1 Interest rate per annum 13.00% 2 Number of years 15 3 Number of compoundings per per annum 1 1÷3 Interest rate per period ( r) 13.00% 2×3 Number of periods (n) 15 Present value (PVA) $ 1,600,000 Annual cash flow (P) $ 247,586.85 1600000/((1-(1/(1+13%)^15))/13%)Related Questions
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