Business, 22.07.2021 16:00, tasiajm

Nicki Johnson, a sophomore mechanical engineering student, receives a call from an insurance agent who believes that Nicki is an older woman who is ready to retire from teaching. He talks to her about several annuities that she could buy that would guarantee her a fixed annual income. The annuities are as follows: Duration of the Annuity (Years) Annuity Purchase Price of the Annuity (At t = 0) $50,000 $30,000 $50,000 UD Amount of Money Received Per Year $9,000 $6,000 $7,500 15 16 18 Nicki could earn 12 percent on her money by placing it in a savings account. Alternatively, she could place it in any of the above annuities. Which annuities in the table above, if any, will earn Nicki a higher return than investing in the savings account earning 12 percent? a. If Nicki could earn 12 percent on her money, what is the present value of annuity A with $9,000 payments per year and 15 years duration? $ (Round to the nearest cent.) If Nicki could earn 12 percent on her money by placing it in a savings account, should she place it instead in annuity A? (Select the best choice below.) A Yes Nicki should place her money in annuity A because the present value of the annuity is areater than the initial payment Click to select your answer(s). . Annuity Duration of the Annuity (Years) Purchase Price of the Annuity (At t = 0) $50,000 $30,000 $50,000 Amount of Money Received Per Year $9,000 $6,000 $7,500 15 16 18 Nicki could earn 12 percent on her money by placing it in a savings account. Alternatively, she could place it in any of the above annuities. Which annuities in the table above, if any, will earn Nicki a higher return than investing in the savings account earning 12 percent? O A. Yes. Nicki should place her money in annuity A because the present value of the annuity is greater than the initial payment. O B. No. Nicki should not place her money in annuity A because the present value of the annuity is smaller than the initial payment. b. If Nicki could earn 12 percent on her money, what is the present value of annuity B with $6,000 payments per year and 16 years duration? $ (Round to the nearest cent.) Click to select your answer(s). O A. Yes. Nicki should place her money in annuity B because the present value of the annuity is greater than the initial payment. B. No. Nicki should not place her money in annuity B because the present value of the annuity is smaller than the initial payment. C. If Nicki could earn 12 percent on her money, what is the present value of annuity C with $7,500 payments per year and 18 years duration? $ (Round to the nearest cent.) Click to select your answer(s). If Nicki could earn 12 percent on her money by placing it in a savings account, should she place it instead in annuity C? (Select the best choice below.) A. Yes. Nicki should place her money in annuity C because the present value of the annuity is greater than the initial payment.
B. No. Nicki should not place her money in annuity C because the present value of the annuity is smaller than the initial payment. Click to select your answer(s).

Answers: 1

Show answers

Other questions on the subject: Business

Business, 22.06.2019 01:20, MendesArmy333

All of the industries and businesses in the country of marksenia are privately owned and sell products at different prices that are not controlled by the government or any other organizational body. consumers in marksenia are free to buy as much of the products as they like from the businesses they want. the country of marksenia has a

Answers: 1

continue

Business, 22.06.2019 01:30, whocaresfasdlaf9341

If a firm plans to issue new stock, flotation costs (investment bankers' fees) should not be ignored. there are two approaches to use to account for flotation costs. the first approach is to add the sum of flotation costs for the debt, preferred, and common stock and add them to the initial investment cost. because the investment cost is increased, the project's expected return is reduced so it may not meet the firm's hurdle rate for acceptance of the project. the second approach involves adjusting the cost of common equity as follows: . the difference between the flotation-adjusted cost of equity and the cost of equity calculated without the flotation adjustment represents the flotation cost adjustment. quantitative problem: barton industries expects next year's annual dividend, d1, to be $1.90 and it expects dividends to grow at a constant rate g = 4.3%. the firm's current common stock price, p0, is $22.00. if it needs to issue new common stock, the firm will encounter a 6% flotation cost, f. assume that the cost of equity calculated without the flotation adjustment is 12% and the cost of old common equity is 11.5%. what is the flotation cost adjustment that must be added to its cost of retaine

Answers: 1

continue

Business, 22.06.2019 13:10, Hannahdavy5434

Thomas kratzer is the purchasing manager for the headquarters of a large insurance company chain with a central inventory operation. thomas's fastest-moving inventory item has a demand of 6,000 units per year. the cost of each unit is $100, and the inventory carrying cost is $10 per unit per year. the average ordering cost is $30 per order. it takes about 5 days for an order to arrive, and the demand for 1 week is 120 units. (this is a corporate operation, and the are 250 working days per year.)a) what is the eoq? b) what is the average inventory if the eoq is used? c) what is the optimal number of orders per year? d) what is the optimal number of days in between any two orders? e) what is the annual cost of ordering and holding inventory? f) what is the total annual inventory cost, including cost of the 6,000 units?

Answers: 3

continue

Business, 22.06.2019 14:40, ZoomZoom44

You are purchasing a bond that currently sold for $985.63. it has the time-to-maturity of 10 years and a coupon rate of 6%, paid semi-annually. the bond can be called for $1,020 in 3 years. what is the yield to maturity of this bond?

Answers: 2

continue

Do you know the correct answer?

Nicki Johnson, a sophomore mechanical engineering student, receives a call from an insurance agent w...