A death benefit on a life insurance policy can be paid in one of the following three ways: (i) A perpetuity of $250 at the end of each month (ii) $795.70 at the end of each month for n years (iii) One payment of $81,007 at the end of n years If each payment method produces the same presen for the death benefit, what is the present value of the death benefit? A. 48,300 B. 55,600 C. 61,900 D. 69,200 E. 78,500
Q: Year 0 1 23456 Project A Cash flow -2500 900 800 1600 100 50 300 Project B Cash flow -2500 50 600…
A: Capital budgeting is a process of allocating resources to various profitable investment…
Q: David estimated a six-month forward rate of C$1.01 per US$. The six-month US$ interest rate is…
A: The objective of the question is to find the six-month Canadian interest rate based on the concept…
Q: Required information A theft-avoidance locking system has a first cost of $19.000, an AOC of…
A: To find the market value (M) after 2 years that would make the annual worth the same as it is for…
Q: If 10-year T-bonds have a yield of 6.2%, 10-year corporate bonds yield 11.9%, the maturity risk…
A: The extra return that investors need to offset the risk of a bond or loan default is known as the…
Q: You have decided to purchase shares of GHC but need an expected 14 percent rate of return to…
A: Dividend per share = $4.80Required rate of return = 14% = 0.14
Q: The one year forward premium for euro against the dollar is 4%. If the interest rate in the euro…
A: Forward Premium = 4% = 0.04Interest Rate in the Foreign Currency = 4.5% = 0.045
Q: Vijay
A: The objective of this question is to find out how much money needs to be deposited today in order to…
Q: Arcs and Triangles paid an annual dividend of $1.47 per share last month. The company is planning on…
A: The DDM refers to the method of calculation of the value of stock based on the future dividends that…
Q: You find the following corporate bond quotes. To calculate the number of years until maturity,…
A: Bonds can be referred as financial debt securities that can be purchased at the settlement date and…
Q: The following table shows the sensitivity of four stocks to the three Fama-French factors. Assume…
A: Expected returns refer to the anticipated gains or losses an investor can reasonably expect from an…
Q: Beach & Compan grow at a rate of 5 rate for the foreseeable future. Beach faces a 21 percent tax…
A: EBIT$40.00Depreciation$18.00Capital expenditure$8.00Growth rate5%Tax rate21%Debt to equity…
Q: Jenny Lopez estimates that as a result of completing her masters degree, she will earn an additional…
A: Annuity refers to the mode of regular equal payments that should be paid continuously in consecutive…
Q: Tanaka Machine Shop is considering a 4-year project to improve its production efficiency. Buying a…
A: NPV is defined as the sum of the present values of all future cash inflows less the sum of the…
Q: You became a fund manager in UAlbany Bank. After research, you pulled up two potential assets to…
A: Stock returns are never constant. It keeps on changing as per the state of economy. We assign…
Q: Miller Brothers Hardware paid an annual dividend of $3.25 per share last month. Today, the company…
A: Dividend paid last month = $3.25Annual growth rate of dividends = 4.72%Required rate of return =…
Q: Ben and Carla Manchester plan to buy a condominium. They will obtain a $166,000, 30- year mortgage…
A: The total monthly housing payment will be the addition of the EMI payment, monthly property taxes,…
Q: The Fl Corporation's dividends per share are expected to grow indefinitely by 8% per year. Required:…
A: a.The current stock price of FI Corporation can be determined using the Dividend Discount Model…
Q: Joe needed $20,000 to put a down payment of the new Corvette that he is buying. AAA insurance…
A: A loan is a financial arrangement where a lender provides a specified amount of money to a borrower…
Q: Suppose Capital One is advertising a 60-month, 5.56% APR motorcycle loan. If you need to borrow…
A: Annual Percentage Rate (APR) = 5.56%Monthly rate (r) = APR / 12 = 5.56% / 12 = 0.4633333333% or…
Q: The home appliance department of a large department store is using a lot size reorder point system…
A: Transform demand into units per yearCalculate the holding cost per unit per yearCalculate the…
Q: (Related to Checkpoint 6.3) (Determining the outstanding balance of a loan) Ten years ago you took…
A: The current loan balance amount can be determined by using the Present worth formula in the excel…
Q: The FI Corporation’s dividends per share are expected to grow indefinitely by 8% per year. Required:…
A: 1.) The current stock price according to the DDM would be $162.00.2.) The implied value of the ROE…
Q: Task 2 – New starters – seasonal workers You join a retail organisation which pays employees on a…
A: The objective of the question is to identify the potential issues with the current payroll procedure…
Q: You are evaluating two different silicon wafer milling machines. The Techron I costs $252,000, has a…
A: NPV analysis is done to find the better investment opportunities amongst various investment…
Q: Fernando Designs is considering a project that has the following cash flow and WACC data. What is…
A: Discount rate or WACC (r) = 10.75% or 0.1075Cash Flows:Initial Investment (Year 0): -$800Year 1:…
Q: A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a…
A: Here,Expected Return E(R )Standard Deviation Stock Fund (S)19%31%Bond Fund (B)14%23%Risk Free…
Q: ercent per annum in the United States and 7 percent per annum in Germany. Currently, the spot…
A: To determine where the treasurer of IBM should invest the extra cash reserve to maximize the return…
Q: (Related to Checkpoint 6.2) (Present value of annuity payments) The state lottery's million-dollar…
A: Variables in the question:PMT=$40000 First payment of $40000 is made immediatelynper=24a) Discount…
Q: Consider a mutual fund with $200 million in assets at the start of the year and with 10 million…
A: rate of return refers to the return that is being earned by the investors over the investment amount…
Q: A pharmaceutical company announces that it has received Federal Drug Administration approval for a…
A: As per the efficient market hypothesis, three forms of efficiency affect the changes in stock prices…
Q: Midland Oil has $1,000 par value bonds outstanding at 13 percent interest. The bonds will mature in…
A: A bond pays regular coupon payments and par value at maturity of the bond. In this case annual…
Q: Hi there, I am trying to figure out how to calculate interest rates. If the interest rate is 3.75%…
A: Annual interest rate (r) = 3.75% or 0.0375Number of times compounding happens per year (n) = 4 (as…
Q: Ella's investment.
A: Ella's after tax real rate of return accounts for both inflation and capital gains tax, revealing…
Q: increased $5 and the year's depreciation expense was $30. If Cash Flow from +$150, what was the…
A: Cash flow from operation is the cash available from the main core business activities of the…
Q: A coupon bond of 9.2 percent with 14 years left to maturity is priced to offer a 7.10 percent yield…
A: Bond valuation refers to a method that is used to compute the current value or present value (PV) of…
Q: Constant-Ratio Change in Income and Value: A property has an income and value that are increasing at…
A: Value of Property:-1. Net Operating Income (NOI): This is the annual income generated by the…
Q: What is the weighted-average cost of capital for SKYE Corporation given the following information?…
A: Weighted average cost of capital can be referred as the average minimum rate of return that a firm…
Q: Assume that the risk-free rate is 3.6% and the market risk premium is 4%. What is the required rate…
A: Risk-Free Rate = 3.6%Market Risk Premium = 4%Beta = 1.4
Q: Assume that the risk-free rate is 7.5% and the required return on the market is 9%. What is the…
A: Given that:Risk free rate = 7.5%Required market return = 9%Beta = 3To compute the return
Q: Suppose that Tesla Motors issued a bond with 17 years until maturity and a face value of $100, and a…
A: Time to maturity = 17 yearsface value = $100Coupon rate = 7.5%YTM = 6.3%To find: The price of the…
Q: Michael Scott Paper, Inc. is considering a new machine that requires an initial investment of $650,…
A: Net Present Value (NPV) is a financial metric that helps assess the profitability of an investment…
Q: A brand new amusement park is paying lots of money to advertise itself to local community. And its…
A: Compounding is an important aspect of the concept of time value of money. When you deposit a sum of…
Q: Given the information below for Seger Corporation, compute the expected share price at the end of…
A: Year201620172018201920202021Price$94.50$100.40$99.10$97.90$121.50$136.80EPS$4.34$5.05$5.22$6.06$7.00…
Q: You have just arranged for a $1,800,170 mortgage to finance the purchase of a large tract of land.…
A: Loan balance:The loan balance is the outstanding amount of money that a borrower owes to a lender,…
Q: klp.2
A: The objective of the question is to estimate the discount rate used in valuing a project. The…
Q: The repeating cash flows for a certain project are as given in the table below. Find the equivalent…
A: Equivalent annual worth refers to the cost which is incurred on an asset for the purpose of owned,…
Q: Acme Investors is considering the purchase of the undeveloped Baker Tract of land. It is currently…
A: Net present value is the value added by the project to the company and project with more value…
Q: Ontario passed a law in 1996 that the names of all public servants earning $100 000 or more will be…
A: The time value of money is a concept in finance that recognizes the idea that a sum of money has…
Q: Today is your 60th birthday and you plan to retire today. You will make $1364.6 per month if you…
A: Concepts:Canada Pension Plan (CPP) : This is the government-run retirement income program. Your…
Q: If you borrow $1000.00 on May 1, 2019, at 12% compounded semi-annually, and interest on the loan…
A: The objective of the question is to find out the due date of a loan given the principal amount,…
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 1 images
- The beneficiary of a life insurance policy is to receive $2000 a year for 5 years, the first payment to be made at the time of the death of the injured. Find the value of the annuity at the time of death of injured, assuming the current interest rate to be 4%. Answer: $9259.8A perpetuity paying $3, 000 at the beginning of each two years has the same present value as another perpetuity with level payments, this one having payments at the end of each three years. Express the level payment amount of the second perpetuity, P, as a function of the annual effective interest rate i.The proceeds of $493000 death benefit are left on deposit with an insurance company for 10 years at an annual effective interest rate of 18.04 %. The balance at the end of 10 years is paid to the beneficiary in 125 equal monthly payments of X, with the first payment made at the end of 10 month from the end of deposit. During the payout period, interest is credited at an annual effective interest rate of 12.89 %. Calculate X. Answer: 41544.44
- Express the net single premium (NSP) for a life insurance policy providing a $500,000 death benefit for 15 years and $1,000,000 thereafter if the age at issue is 25 in three (3) different ways. Assume that benefits are payable at the moment of death.If the value of the annual payment is $34,059.92, calculate the present value of a life annuity payable to a 54-year-old woman, if the rate is 4.5% per year, considering from the mortality tables that N55 = 127,744 and if D54 = 8701.9A life insurance company issues a whole life annuity immediate with annual payments. The annuity is issued to (65). The annuity pays 50,000 at the end of each year for the life of the annuitant with the first payment being made at age 66. You are given: A single premium is paid to purchase this annuity. Mortality follows the Illustrative Life Table with i = 0.06. Assume that the single net premium, P, is 110% of the expected present value at issue of benefits. Calculate the probability that this policy will generate a profit using P.
- A perpetuity of $1 each year, with the first payment due immediately, has a present value of $25 at an annual effective rate of i%. The owner exchanges it for another perpetuity with the first payment due immediately and subsequent payments due at two year intervals. What should the payment of the second perpetuity be, in order to keep the same interest rate, i%, and the same present value? A B с D E Less than $1.90 At least $1.90, but less than $1.94 At least $1.94, but less than $1.98 At least $1.98, but less than $2.02 $2.02 or moreA perpetuity has payments of 1, 1.2, 1, 1, 3, 1, 1, 4. Payments are made at the end of each year. Assuming an annual effective interest rate of 5%, find the present value of the perpetuity. A B с D E 45 60 67 119 440 4refers to receiving a set monthly payment for the rest of your life. O Certain Period Annuity O Single Life Annuity O Joint & Survivor Annuity O Lump-sum Annuity
- Assume that a pension plan offers to pay $500,000 on a person's retirement (his/her sixty-fifth birthday) or a semi-annual annuity for the remainder of the person's life – i.e., starting 6 months from the date of retirement and including his/her date of death. Interest rates are 7 percent compounded annually, and a person's life expectancy has been determined statistically as being 78.5 years. Calculate the amounț of the annuity that would make a person indifferent between the options?l .YsmAssume that a pension plan offers to pay $500,000 on a person's retirement (his/her sixty-fifth birthday) or a semi-annual annuity for the remainder of the person's life - i.e., starting 6 months from the date of retirement and including his/her date of death. Interest rates are 7 percent compounded annually, and a person's life expectancy has been determined statistically as being 78.5 years. Calculate the amnunt of the annuity that would make a person indifferent between the options? A person joins a pension plan at age 40 (40" birthday). How much will s/he have to pay into the pension fund each year in order to accumulate a balance of $500,000 by the time s/he retires (age 65)? Assume that the final payment is on his/her 60th birthday. Interest rates are 9% compounded semi-annually.Use the ordinary annuity formula shown to the right to determine the accumulated amount in the annuity if $20 is invested semiannually for 20 years at 5.5% compounded semiannually. The accumulated amount will be $