FINS1613 Quiz: Quiz 1 Question Bank Annuities Perpetuities Question F
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a. | Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 20-year annuity is $2 million and the annuity earns a guaranteed annual return of 10 percent. The payments are to begin at the end of the current year |
b. | Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 20-year annuity is $2 million and the annuity earns a guaranteed annual return of 10 percent. The payments are to begin at the end of six years. |
c. | What is the amount of the annuity purchase required if you wish to receive a fixed payment of $230,000 for 20 years? Assume that the annuity will earn 10 percent per year. |