14. A finance company has agreed to pay a retired couple a pension of $19200 per...
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14. A finance company has agreed to pay a retired couple a pension of $19200 per year for the next twenty years, indexed to inflation that is 3% per annum. (a) How much will the company have paid the couple at the end of twenty years? (b) In return, the couple pay an up-front fee which the company invests at a compound interest rate of 7% per annum. The total value of the fee plus interest covers the pension payouts over the twenty-year period. How much did the couple pay the firm up front, correct to the nearest dollar? 14. A finance company has agreed to pay a retired couple a pension of $19200 per year for the next twenty years, indexed to inflation that is 3% per annum. (a) How much will the company have paid the couple at the end of twenty years? (b) In return, the couple pay an up-front fee which the company invests at a compound interest rate of 7% per annum. The total value of the fee plus interest covers the pension payouts over the twenty-year period. How much did the couple pay the firm up front, correct to the nearest dollar?
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a To calculate the total amount the company will have paid the couple at the end of twenty years we ... View the full answer
Related Book For
Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Posted Date:
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