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23. You have a chance to buy an annuity that pays $550 at the beginning of each year for 3 years. You could earn 5.5% on your money in other investments with equal risk. What is the most you should pay for the annuity?
a. $1,412.84
b. $1,487.20
c. $1,565.48
d. $1,643.75
e. $1,725.94
24. You have a chance to buy an annuity that pays $5,000 at the beginning of each year for 5 years. You could earn 4.5% on your money in other investments with equal risk. What is the most you should pay for the annuity?
a 20,701
b. $21,791
c. $22,938
d. $24,085
e. $25,289
25. Your uncle is about to retire, and he wants to buy an annuity that will provide him with $75,000 of income a year for 20 years, with the first payment coming immediately. The going rate on such annuities is 5.25%. How much would it cost him to buy the annuity today?
a. $825,835
b. $869,300
c. $915,052
d. $963,213
e. $1,011,374
26. Your father is about to retire, and he wants to buy an annuity that will provide him with $85,000 of income a year for 25 years, with the first payment coming immediately. The going rate on such annuities is 5.15%. How much would it cost him to buy the annuity today?
a. $1,063,968
b. $1,119,966
c. $1,178,912
d. $1,240,960
e. $1,303,008
27. You inherited an oil well that will pay you $25,000 per year for 25 years, with the first payment being made today. If you think a fair return on the well is 7.5%, how much should you ask for it if you decide to sell it?
a. $284,595
b. $299,574
c. $314,553
d. $330,281
e. $346,795
28. Sam was injured in an accident, and the insurance company has offered him the choice of $25,000 per year for 15 years, with the first payment being made today, or a lump sum. If a fair return is 7.5%, how large must the lump sum be to leave him as well off financially as with the annuity?
a. $225,367
b. $237,229
c. $249,090
d. $261,545
e. $274,622
29. What’s the present value of a 4year ordinary annuity of $2,250 per year plus an additional $3,000 at the end of Year 4 if the interest rate is 5%?
a. $8,509
b. $8,957
c. $9,428
d. $9,924
e. $10,446
30. Suppose you inherited $275,000 and invested it at 8.25% per year. How much could you withdraw at the end of each of the next 20 years?
a. $28,532
b. $29,959
c. $31,457
d. $33,030
e. $34,681
31. Your uncle has $375,000 and wants to retire. He expects to live for another 25 years and to earn 7.5% on his invested funds. How much could he withdraw at the end of each of the next 25 years and end up with zero in the account?
a. $28,843.38
b. $30,361.46
c. $31,959.43
d. $33,641.50
e. $35,323.58
32. Your uncle has $375,000 and wants to retire. He expects to live for another 25 years, and he also expects to earn 7.5% on his invested funds. How much could he withdraw at the beginning of each of the next 25 years and end up with zero in the account?
a. $28,243.21
b. $29,729.70
c. $31,294.42
d. $32,859.14
e. $34,502.10:

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