What is the most you should pay for the annuity

Assignment Help Business Management

Reference no: EM133494888

Discussion Post: Credit Card Issuers Accounting & Business

Question I. JG Asset Services is recommending that you invest $875 in a 5-year certificate of deposit (CD) that pays 3.5% interest, compounded annually. How much will you have when the CD matures?

Question II. How much would $4,950 due in 50 years be worth today if the discount rate were 7.5%?

Question III. Brockman Corporation's earnings per share were $3.50 last year, and its growth rate during the prior 5 years was 11.0% per year. If that growth rate were maintained, how many years would it take for Brockman's EPS to triple?

Question IV. Your friend offers to pay you an annuity of $5,300 at the end of each year for 3 years in return for cash today. You could earn 5.5% on your money in other investments with equal risk. What is the most you should pay for the annuity?

Question V. A new investment opportunity for you is an annuity that pays $1,300 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?

Question VI. Suppose you earned a $525,000 bonus this year and invested it at 8.25% per year. How much could you withdraw at the end of each of the next 20 years?

Question VII. Suppose you just won the state lottery, and you have a choice between receiving $4,500,000 today or a 20-year annuity of $250,000, with the first payment coming one year from today. What rate of return is built into the annuity? Disregard taxes.

Question VIII. What's the present value of $18,500 discounted back 5 years if the appropriate interest rate is 9%, compounded semiannually?

Question IX. American Express and other credit card issuers must by law print the Annual Percentage Rate (APR) on their monthly statements. If the APR is stated to be 12.00%, with interest paid monthly, what is the card's EFF%?

Question X. Billy Thornton borrowed $220,000 at a rate of 7.25%, simple interest, with interest paid at the end of each month. The bank uses a 360-day year. How much interest would Billy have to pay in a 30-day month?

Reference no: EM133494888

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