Calculate the annual cash flows from fixed-payment annuity

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Reference no: EM131878206

a. Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 20-year annuity is $1.2 million and the annuity earns a guaranteed annual return of 10 percent. The payments are to begin at the end of the current year. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

b. Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 20-year annuity is $1.2 million and the annuity earns a guaranteed annual return of 10 percent. The payments are to begin at the end of five years. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

c. What is the amount of the annuity purchase required if you wish to receive a fixed payment of $220,000 for 20 years? Assume that the annuity will earn 10 percent per year. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

Reference no: EM131878206

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