Amry and Karen have equal fund at the beginning. Using his fund, Amry purchases a 15-year...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Amry and Karen have equal fund at the beginning. Using his fund, Amry purchases a 15-year annuity-due with annual payments of 3000 each. Karen puts her fund in an investment product earning effective rate of interest 7%. Three years later, she purchases a 12-year annuity immediate with annual payments of Z. The present values of both annuities are evaluated using an interest rate of 8%. (a) Calculate the present value of Karen's fund. (b) Evaluate the difference between Karen's and Amry's annual payment. [3 marks] [6 marks] Amry and Karen have equal fund at the beginning. Using his fund, Amry purchases a 15-year annuity-due with annual payments of 3000 each. Karen puts her fund in an investment product earning effective rate of interest 7%. Three years later, she purchases a 12-year annuity immediate with annual payments of Z. The present values of both annuities are evaluated using an interest rate of 8%. (a) Calculate the present value of Karen's fund. (b) Evaluate the difference between Karen's and Amry's annual payment. [3 marks] [6 marks]
Expert Answer:
Answer rating: 100% (QA)
Amry purchased a 15year annuitydue with annual payments of Ksh 3000 Karen invested her fund at an ef... View the full answer
Related Book For
Posted Date:
Students also viewed these finance questions
-
KYC's stock price can go up by 15 percent every year, or down by 10 percent. Both outcomes are equally likely. The risk free rate is 5 percent, and the current stock price of KYC is 100. (a) Price a...
-
The years 19951999 were the five greatest consecutive years in the stock market in terms of performance. They were followed by 3 years of significant declines, and a recovery in 2003. The data below...
-
A general ledger trial balance at June 30, 2011, for Millar City is as follows: Millar City uses a purchases basis in accounting for supplies. Open encumbrances are considered constrained by the...
-
Evelyn Brantley undoubtedly experiences and must manage intergroup conflict in her role as managing counsel at DuPont. Describe three groups with which she is most likely to have such conflicts.
-
What is a promissory note? What entry is made to record the collection of a promissory note and interest?
-
The reactions in a lead-acid battery are Positive terminal: \(\mathrm{PbO}_{2}+\mathrm{HSO}_{4}^{-}+3 \mathrm{H}^{+}+2 \mathrm{e}^{-} ightarrow\) \[\mathrm{PbSO}_{4}+2 \mathrm{H}_{2} \mathrm{O}\]...
-
Identify the journal in which each of the following transactions is recorded. 1. Cash sales 2. Owner withdrawal of cash 3. Cash purchase of land 4. Credit sales 5. Purchase of merchandise on account...
-
a. Real Estate exhibits a number of features which make them distinct from other types of investments. Identify and explain any five of the features given by international real estate investors...
-
Tom Scott is the owner, president, and primary salesperson for Scott Manufacturing. Because of this, the companys profits are driven by the amount of work Tom does. If he works 40 hours each week,...
-
Directions: Classify the given situations below whether the process is spontaneous or non-spontaneous. 1. Rusting of iron in moist air 6. Drying of leaves 2. Decaying of radioisotopes 7 Dissolving of...
-
QUESTION 1 The followings trial balance are extracted from WIKI Bhd. as at 31 December 2020. Land and building 200,000 Motor vehicles Machinery 90,000 80,000 8% Bond payable 100,000 Ordinary capital...
-
Discuss the following statement in accordance with the relevant generally accepted accounting principle. `Competent managers have been called the most value asset of a business. However, accountants...
-
At the beginning of the year, Fellows Inc. accepted a $6,000 face value, 3-year, non-interest-bearing note in exchange for inventory sold. 10 percent (10%) is a reasonable cost of borrowing for...
-
A provision for environmental obligations has the expectation that it will be paid in ten years for an amount of $15 million. What is amount of the provision that should be reported if the company's...
-
public class Class extends ClassA public classB ( ( Time left 0 0 : 1 2 : 0 3 int init = 1 0 ; super ( 4 0 ) ; O a . . The method super is not defined. b . . No values may be passed to super. O c . ....
-
A plastic plant worth $ 242800 had a useful life of 11 years and a scrap value of $ 17276. However, after 3 years of operation, it got washed away by a tsunami, making it a total loss. How much money...
-
Suppose that you are part of a virtual team and must persuade other team members on an important matter (such as switching suppliers or altering the project deadline). Assuming that you cannot visit...
-
(a) Of the stock mutual funds listed in Table 15-3, which two would you recommend to meet the Hernandezes goals? Why? (b) Would you recommend that the Hernandezes remain invested in those twofunds...
-
(a) Make suggestions about how the $355 might be integrated into the Johnsons budget by making reductions in certain expense categories. (b) If they cannot make room in their budget for a $355...
-
1. List the benefits of buying term and investing the rest. 2. Explain how the pattern of one's life insurance program should vary from young adulthood through retirement years. 3. Explain how you...
-
Give an example of a local wind pattern. Give an example of a global wind pattern.
-
The relative humidity of air at its dew-point temperature is (a) 0%. (b) 10%. (c) 50%. (d) 100%.
-
What is wind? What causes wind?
Study smarter with the SolutionInn App