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What is the most you would pay for investment

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Reference no: EM131862070

Please show equations so I can see how you arrived at the solution.

Ordinary Annuity vs. Annuity Due.

1. At the end of each year you deposit $1,200 in a retirement account that pays 6%. How much money will you accumulate for your retirement if you plan to retire 40 years from now?

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2. Starting today Andrew will deposit $750 per year in a retirement account that pays 6%. How much money will he accumulate for his retirement if he plans to retire 40 years from now?

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3. You are looking into an investment that will pay you $5,000 per year for the next 8 years. If you require a 9% return, what is the most you would pay for this investment?

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4. If today you pay $28,000 in exchange for an 8%, 15 year annuity, what will be the annual cash flow?

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5. You will buy a house for $150,000. Your mortgage bank will lend you the money at 6% for 15 years. How much will you have to pay every month?

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6. An insurance company is trying to sell you an investment policy that will pay you and your heirs $20,000 per year forever. If the required return on the investment is 7%, how much will you pay for the policy?

Reference no: EM131862070

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