Homework16 Help Save & Exit Submit Check my work 15 Professors Annuity Corp, off

Question

Homework16 Help Save & Exit Submit Check my work 15 Professors Annuity Corp, offers a lifetime annuity to retiring professors. For a payment of $85,000 at age 65, the firm wll pay the retiring professor $725 a month until death. 10 polnts a. If the professor's remaining life expectancy is 20 years, what is the monthly Interest rate on this annulty? (Do not round Intermedlate calculations. Enter your answer es a percent rounded to 2 decimal places.) Monthly rate on annuily 0.69% e look Hint Print References b. What is the effective annual interest rate? (Use the monthly rate computed in part (a) rounded to 2 decimal places when expressed as a percent. Enter your answer as a percent rounded to 2 declmal places.) annual rate C. If the monthly interest rate is 1.00%, what monthly annuity payment can the firm offer to the retiring professor? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Monthly annuity payment Mc Graw KPrev 15 of 25 l Next>

Explanation / Answer

a) 0.69%

b) Effective annual rate = (1+ 0.69%)12-1 = 8.58%

c)

Monthly payment = 935.92

Best of Luck. God Bless
Please Rate Well

Number of Years 20 Number of periods = Years* 12 240 PV 85000 PMT 725 Rate 0.69% Using excel Function RATE(240,-725,85000)

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.