klp.3 22. Insurance Settlement Options The beneficiary of aninsurance policy has the option of receiving a lump-sum paymentof $275,000 or 10 equal yearly payments, where the first paymentis due at once. If interest is at 3.5% compounded annually, find theyearly payment.

The objective of the question is to find the yearly payment that the beneficiary of an insurance…

Answered: 22. Insurance Settlement Options The…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 4P

See similar textbooks

Similar questions

A 6-year term insurance policy has an annual premium of $200, and at the end of 6 years, all payments and interest are refunded. What lump-sum deposit is necessary to equal this amount if you assume an interest rate of 2.5% compounded annually? (a) State the type. O future value O ordinary annuity O present value of an annuity O amortization O sinking fund (b) Answer the question. (Round your answer to the nearest cent.) $
A 6-year term insurance policy has an annual premium of $500, and at the end of 6 years, all payments and interest are refunded. What lump-sum deposit is necessary to equal this amount if you assume an interest rate of 2.5% compounded annually? (a) State the type. A.future valueB. ordinary annuity C.sinking fundD. present value of an annuityE.amortization (b) Answer the question. (Round your answer to the nearest cent.)
A 3-year term insurance policy has an annual premium of $300, and at the end of 3 years, all payments and interest are refunded. What lump-sum deposit is necessary to equal this amount if you assume an interest rate of 4.5% compounded annually? (a) State the type. O sinking fund O present value of an annuity O amortization O future value O ordinary annuity (b) Answer the question. (Round your answer to the nearest cent.) $4 Need Help? Read It
A 3-year term insurance policy has an annual premium of $200, and at the end of 3 years, all payments and interest are refunded. What lump-sum deposit is necessary to equal this amount if you assume an interest rate of 3.5% compounded annually? (a) State the type. sinking fund present value of an annuity amortization ordinary annuity future value (b) Answer the question. (Round your answer to the nearest cent.) $
Consider a five-year fixed - payment security that has a present value of $1,500. If the annual rate of discount is 2 percent, the payment made at the end of each year is Question 9 Select one: a. S231.77. b. $288.24. c. S 300.00. d. $310.00.
A Sunlife Insurance offers a 7-year ordinary annuity with a guaranteed rate of 6.35% compounded annually. How much should you pay for one of these annuities if you want to receive payments of $10,000 annually over the 7-year period? Show solution.
You are given the following about two annuities-immediate: Annuity A pays 300 at the end of each year for 18 years. d ofc Annuity B pays 399.865 at the end of each year for 9 years. At an annual effective rate of interest i, the PV of both annuities are equal. Calculate i. Ponible Answers 12% 11% C 10% D 13% 14%
A perpetuity of $1 each year, with the first payment due immediately, has a present value of $25 at an annual effective rate of i%. The owner exchanges it for another perpetuity with the first payment due immediately and subsequent payments due at two year intervals. What should the payment of the second perpetuity be, in order to keep the same interest rate, i%, and the same present value? A B с D E Less than $1.90 At least $1.90, but less than $1.94 At least $1.94, but less than $1.98 At least $1.98, but less than $2.02 $2.02 or more
An insurance company offers you an end-of-year annuity of $48,000 per year for the next 20 years. They claim your return on the annuity is 9 percent. What should you be willing to pay today for this annuity? a. $408,672 b. $438,192 c. $398,144 d. $429,600
Find the future value of the ordinary annuity. (Round your answer to the nearest cent.) $120 monthly payment, 5.25% interest, 1 year $
You have been awarded monthly payments of 2800 for 15 years as an insurance settlement ABC Finance has offered to pay you a lump sum amount today in exchange for your annuity stream When determining the price to be paid today will you or will ABC prefer a lower discount rate over a higher discount rate Explain your reasoning
Use the following table to calculate the minimum premium an insurance company should charge for a USD 5 million three-year term life insurance contract issued to a man aged 60. Assume that the premium is paid at the beginning of each year and death always takes place halfway through a year. The risk-free interest rate is 6% per annum (with semiannual compounding). Age 60 61 62 Probability of death within one year 0.011407 0.012315 0.013289 Survival probability 0.85227 0.84254 0.83217 Life expectancy (years) 20.92 20.16 19.40

SEE MORE QUESTIONS

Recommended textbooks for you

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

SEE MORE TEXTBOOKS

22. Insurance Settlement Options The beneficiary of an insurance policy has the option of receiving a lump-sum payment of $275,000 or 10 equal yearly payments, where the first payment is due at once. If interest is at 3.5% compounded annually, find the yearly payment.