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ch4aika [34]
4 years ago
15

You deposit $10,000 annually into a life insurance fund for the next 10 years, at which time you plan to retire. Instead of a lu

mp sum, you wish to receive annuities for the next 20 years. What is the annual payment you expect to receive beginning in year 11 if you assume an interest rate of 8 percent for the whole time period?
Business
1 answer:
Oksi-84 [34.3K]4 years ago
8 0

Answer:

The annuity is $ 7243,28

Explanation:

To calculate the following we can use a financial calculator.

We are making deposits of $10000 for 10 years. The interest rate is 8%

We need to work out the future value of the lumpsum in 10 years time.

n = 10 i = 8% pmt = 10000 COMP FV

FV = $ 144865,62

Now to calculate the annual annuity receivable we divide this amount by 20.

144865,62 / 20 = $ 7243,28

Thus the annual annuity you will receive over the 20 year period is $7243,28

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Times Interest earned is a financial ratio that shows how many times an entity's net income or earnings before interest and taxes can be used to settle the company's interest expense.

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