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Purchase of two different insurance annuities

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Q1. You are considering the purchase of two different insurance annuities. Annuity A will pay you $10,000 each year for eight years. Annuity B will pay you $8,000 per year for 12 years. Assuming your money is worth 10% and that each costs the same to purchase today, which annuity would you prefer?

Q2. Real estate values in your area are going up at the rate of 14% each year. You want to buy an average house. Today the average price of homes is $128,000. Lenders require 20% down payment. You figure you'll be ready to make the down payment in 6 years. How much should it be?

Reference no: EM132623134

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