Question 1:
Score 0/1
Your response
Correct response
Calculating Annuity Values
If you deposit $1,800 at 9.5 percent interest at the end of each of the next 19 years you will have $
(0%)
in the account. If you make deposits for 38 years, you will have $
(0%) in the account at the end of 38
years.
(Round your answers to 2 decimal places. Omit the "$" sign in your response.)
Calculating Annuity Values
If you deposit $1,800 at 9.5 percent interest at the end of each of the next 19 years you will have $
87,324.
with a tolerance of ± 0.1%
in the account. If you make deposits for 38 years, you will h
$
577,106.39 with a tolerance of ± 0.1%
in the account at the end of 38 years.
(Round y
answers to 2 decimal places. Omit the "$" sign in your response.)
Total grade:
0.0×1/2 + 0.0×1/2 = 0% + 0%
Feedback:
Here we need to find the FVA. The equation to find the FVA is:
FVA =
C
{[(1 +
r)
t
– 1] /
r
}
FVA for 19 years =$1,800[(1.095
19
– 1) / 0.095]
FVA for 19 years = $87,324.22
FVA for 38 years =$1,800[(1.095
38
– 1) / 0.095]
FVA for 38 years = $577,106.39
Question 2:
Score 0/1
Your response
Correct response
Calculating Perpetuity Values
Curly’s Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $12,000 per
year forever. If the required return on this investment is 6 percent, you will pay $
(0%) for the policy.
(Round your answer to 2 decimal places. Omit the "$" sign in your response.)
Calculating Perpetuity Values
Curly’s Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $12,000
year forever. If the required return on this investment is 6 percent, you will pay $
200,000 with
tolerance of ± 0.1%
for the policy.
(Round your answer to 2 decimal places. Omit the "$" sign
your response.)
Total grade:
0.0×1/1 = 0%
Feedback:
This cash flow is a perpetuity. To find the PV of a perpetuity, we use the equation:
PV =
C
/
r
PV = $12,000 / 0.06 = $200,000
Question 3:
Score 0/1
Your response
Correct response
Calculating Perpetuity Values
Curly’s Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $11,000 per year
forever. The policy costs $187,000. The interest rate that would make this a fair deal is
(0%) percent.
(Input answer as a percent rounded to 2 decimal places, without the percent sign).
Calculating Perpetuity Values
Curly’s Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $11,0
forever. The policy costs $187,000. The interest rate that would make this a fair deal is
5.88 with a
tolerance of ± 1.0%
percent.
(Input answer as a percent rounded to 2 decimal places, without the percent sign).
Total grade: