1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
horrorfan [7]
3 years ago
9

Because your mother is about to retire, she wants to buy an annuity that will provide her with $75,000 of income a year for 20 y

ears, with the first payment coming immediately. The going rate on such annuities is 5.25%. How much would it cost her to buy the annuity today
Business
1 answer:
siniylev [52]3 years ago
5 0

The calculated present value of the annuity is $915,166.70.

Explanation and Solution:

Annuity is a collection of fixed payments made or earned either at the close or at the beginning of any term such that a significant initial payment or receipt may be turned into a set of comparatively minor payments or receipts. An annuity that lasts indefinitely is called perpetuity.

The formula for the present value of the annuity is given by:

P = \frac{1- (1+i)^{-n} }{i}  * R

Where;

R = annual payment = $75,000

i = interest rate = 5.25%

P = Present value of annuity

n = number of years = 20 years

P = \frac{1- (1+5.25)^{-20} }{5.25}  * 75,000

P = $915,166.70

You might be interested in
Daniel has decided to open his own bakery using locally sourced ingredients and supplies. He provides income and jobs to local s
exis [7]

Answer: The invisible hand

Explanation: Invisible hand can be defined as those unobservable market forces which helps the forces of demand and supply to reach to an equilibrium level.

In the given case, Daniel is giving work to local suppliers and jobs to residents as well as producing demand in the market by its products, thus, we can conclude that the given case is an example of invisible hand.

5 0
3 years ago
Read 2 more answers
A corporate bond with a 6.5 percent coupon has 15 years left to maturity. It has had a credit rating of BBB and a yield to matur
Scrat [10]

Answer:

Price change in dollars = $104.22

% decrease in price of dollars = 11.13%

Explanation:

We assume the corporate bond have a face value of $1,000

Face Value = $1000

Coupon = 6.5%*1000/2 =32.50

Number of Periods = 15*2 =30

Semi annual rate of BBB bond = 7.2%/2 =3.6%

Price of BBB Bond = PV of Coupons + PV of Par Value =

Price of BBB Bond = 32.50*(((1-(1+3.6%)^-30)/3.6%)+1000/(1+3.6%)^30

Price of BBB Bond = $936.43

Semiannual Discount Rate for BB bond = 8.5%/2 = 4.25%

Price of BB Bond = PV of Coupons + PV of Par Value

Price of BB Bond = 32.50*(((1-(1+4.25%)^-30)/4.25%)+1000/(1+4.25%)^30

Price of BB Bond= $832.21

Price change in dollars = $936.43 - $832.21

Price change in dollars = $104.22

% decrease in price of dollars = $104.22 / $936.43

% decrease in price of dollars = 0.111295025

% decrease in price of dollars = 11.13%

6 0
3 years ago
What is a companys obligation to contribute to the sustainability of natural resources
FrozenT [24]

Answer:

Companies have a corporate social responsibility towards their environment.

Explanation:

Corporate social responsibility implies that companies are expected to engage in industrial practices that would not result in harm to their environment. For example, the amount of carbon being released into the environment must be controlled as excessive release of carbon can be detrimental to health. It is also not right for waste to be discharged into the oceans because the health of the sea animals, the ocean itself and those who swim in it are at risk.

To promote sustainability, companies avoid practices that would eventually harm their environment. Abiding by these practices might take a longer route, but is eventually cost effective and beneficial.

8 0
3 years ago
The summary of a state’s financial transactions with the rest of the world, including trade, __________, and the remittance of i
Oduvanchick [21]
The summary .................. including trade, FOREIGN AID and the remittance............. Balance of payment is the record of all economic transactions between the residents of a country and the rest of the world in a particular period of time. A balance of payment allows a country to monitor its import and export rates.
8 0
2 years ago
Who is better<br> James Charles or Ed Sheeran?
Readme [11.4K]

Answer:

depends on your taste

8 0
2 years ago
Read 2 more answers
Other questions:
  • For each of the following statements, indicate whether it is true, false, or uncertain and explain why. Average total cost is al
    13·1 answer
  • "what is unsolicited email that plagues employees at all levels and clogs email systems?"
    14·1 answer
  • Artis Sales has two store locations. Store A has fixed costs of $145,000 per month and a variable cost ratio of 60%. Store B has
    12·1 answer
  • Social compensation is especially likely when high-ability group members are suspected of loafing.
    8·1 answer
  • Tommy Baker is an account representative from the United States for an automotive parts supplier and is meeting with a client te
    8·1 answer
  • Which of the following statements is incorrect? Employment insurance compensation encourages longer job searches, which may lead
    14·1 answer
  • In un sistema economico l’offerta di lavoro da parte delle famiglie `e fissa e pari a Ls = 9. Nel sistema operano 100 imprese id
    8·1 answer
  • A contractor must decide between two jobs. One job is a bathroom renovation in a residential home. The other is the construction
    12·1 answer
  • Buying office space is ______________ in the long run-in comparison to leasing. Which is the correct answer?
    6·1 answer
  • what is the surface area of a triangular prism where the base area is 25 m2 (metre square) , the base perimeter is 24 m and the
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!