View the step-by-step solution to:

Question 1 1. The Perpetual Life Insurance Co is trying to sell you an investment policy that will pay you and your heirs $10,185 per year forever.

I have attached a document with the questions I need help answering. I do not need to show work so as long as I have the correct answer.

Thank,
Deibi
Question 1 1. The Perpetual Life Insurance Co is trying to sell you an investment policy that will pay you and your heirs $10,185 per year forever. Suppose the Perpetual Life Insurance Co. told you the policy costs $157,889. At what interest rate would this be a fair deal? Just enter the number in percentages up to 2 decimal points. Do not enter % in the answer box. Question 2 1. Assume interest rate of 6%. A company receives cash flows of $104,875 at the end of years 4, 5, 6, 7, and 8, and cash flows of $240,352 at the end of year 10. Compute the future value of this cash flow stream. Do not enter the symbol $ in your answer. Simply enter the answer rounded off to two decimal points. Question 3 1. What is the effective rate of 11% compounded monthly? Do not enter the symbol % in your answer. Simply enter the answer in percentages rounded off to two decimal points. Question 4 1. How many years it will take to grow your money from $3,573 to $6,334 if you can earn an interest of 6% compounded monthly? Note: Do not write "years" in your answer. Simply write the number in the answer box. Question 5 1. If you receive $308 at the end of each year for the first three years and $619 at the end of each year for the next three years. What is the present value? Assume interest rate is 5%. Hint: This is an uneven cash flow problem. Use the CF function and solve for NPV to get the answer. Just enter the number up to 2 decimal points. Do not enter $ in the answer box. Question 6 1. 027: Say, you deposit $3,710 in a bank for 19 years. What is the amount you will have in the bank at the end of 19 years if interest of 7 % compounded monthly for first 6 years and
Background image of page 1
interest of 7 % compounded quarterly for the remaining years? Note: Do not put $ sign in your answer. Simply write the number in the answer box. Question 7 1. Today, you are purchasing a $3,881 10-year car loan at 13 percent. You will pay annually at the end of each year. What is the amount of each payment? Question 8 1. 026: Say, you deposit $1,493 in a bank for 17 years. What is the amount you will have in the bank at the end of 17 years if interest of 7 % for first 10 years and interest of 9 % for the remaining years? Note: Do not put $ sign in your answer. Simply write the number in the answer box. Question 9 1. If you can triple your money in 9 years, what is the implied rate of interest? Note: Do not put % sign in your answer. Simply write the number in percentages in the answer box. . Question 10 1. Gertrude Carter and Co. has an outstanding loan that calls for equal annual payments of $14,903 over the 10-year life of the loan. The original loan amount was $100,000 at an APR of 8 percent. How much of the third payment is interest? Do not enter the symbol $ in your answer. Simply enter the answer rounded off to two decimal points. Question 11 1. Barrett Pharmaceuticals is considering a drug project that costs $176,677 today and is expected to generate end-of-year annual cash flows of $13,721, forever. At what discount rate would Barrett be indifferent between accepting and rejecting the project? Just enter the number in percentages up to 2 decimal points. Do not enter % in the answer box. Question 12 1. If you can double your money in 27 years, what is the implied annual rate of interest, given that compounded in quarterly? Note: give your answer in percentages. Note: Do not put % sign in your answer. Simply write the number in percentages in the answer box.
Background image of page 2
Show entire document

Recently Asked Questions

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

-

Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question