6. An insurance agent is trying to sell you an immediate retirement annuity that offers $15,000 per year at the end of each of the next 30 years. The price of the investment proposed by the agent is $250,000. If you have the opportunity to earn 10% compounded annually on risky investments comparable to the retirement annuity offered, determine the most you would be willing to pay for the project. Would you buy it?

7. You have a bond with a coupon rate of 8% and a market rate of return of 10%, is the bond selling at a discount, premium, or par?

8. You plan to retire in exactly 30 years. Your goal is to create a fund that will allow you to receive $30,000 per year for the 20 years you think you will live after retirement. You can earn 10% compounded annually for the 20-year period after retirement.

to. How much must he have accumulated at retirement 30 years from now so that he can have an annuity of $30,000 per year for the 20 years he will live after retirement? Assume the annuity as an ordinary annuity.

b. How much would you need to invest today as a single amount to get the amount in (a) if the money can grow at 8% over the 30 years before retirement?

c. If instead of investing a single amount, you prefer to raise the amount in (a) by depositing annuities at the end of each of the 30 years before retirement, determine the amount of that annuity, assuming 8% growth.

9. Determine the future value of the following series of cash flows, assuming a money growth rate of 10% compounded annually: year 1 $2,200; year 2 $1,500; year 3 $1,500; year 4 $1,750.

10. In how many years would you retire if you wanted to retire with $1,000,000, contributing $15,000 a year at a rate of return of 10%?

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