Insurer buy now to fully fund expected cash outflow

Assignment Help Financial Management

Reference no: EM132018223

A life insurer owes $800,000 in 8 years. To fund this outflow the insurer wishes to buy strips that mature in 8 years. The strips have a $1000 face value per strip and a 6% annual rate with semi-annual compounding. How much strips (in dollar amount) must the insurer buy now to fully fund the expected cash outflow (to the nearest dollar) in 8 years?

Reference no: EM132018223

Questions Cloud

Estimate the operating cash flows : Estimate the operating cash flows (OCF) of this project during the next five years (Year 1 – Year 5).

Provide a clear description of what work or life balance is : Case Study Assignment - Provide a clear description of what Work/Life Balance is, its brief history and current issues for implementing it

What is the profit from transaction from finance perspective : What is the profit from the transaction from a finance perspective (adjusting for the TVM)?

Create a summary for your proposal : You will create a summary for your proposal that will be submitted this week as well as a part of the final project in Week 8. Attached is my week 1 proposal.

Insurer buy now to fully fund expected cash outflow : How much strips (in dollar amount) must the insurer buy now to fully fund the expected cash outflow (to the nearest dollar) in 8 years?

What is the intrinsic value of the option : If the put option is trading for $5.25, what is the intrinsic value of the option?

Decided to purchase capital asset : You have decided to purchase a capital asset using an 850,000 at a rate of 8% for 25 years.

Reasons for recent growth of international business activity : What are the basic reasons for the recent growth of international business activity? How has technology contributed to the globalization of markets and product?

Discussion on project management advice : Thinking back on everything you have learned in this course, identify the top three (3) most topics that anyone working in human resources needs to know about.

User Account

All Pages