# accounts data bank

Question # 00004143 Posted By: spqr Updated on: 11/26/2013 12:18 AM Due on: 12/31/2013
Subject Accounting Topic Accounting Tutorials:
Question

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 4-year 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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1. ## Solution: accounts data bank

Tutorial # 00003927 Posted By: spqr Posted on: 11/26/2013 12:25 AM
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