(Solving for r with annuities) Nicki Johnson, a sophomore mechanical engineering student, receives a call from...

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(Solving for r with annuities) Nicki Johnson, a sophomore mechanical engineering student, receives a call from an insurance agent, who believes that Nicki is an older woman ready to retire from teaching. He talks to her about several annuities that she could buy that would guarantee her an annual fixed income. The annuities are as follows in the popup window: If Nicki could earn 12 percent on her money by placing it in a savings account, should she place it instead in any of the annuities? Which ones, if any? Why? CCXX300 a. What rate of return could Nicki earn on her money if she place it in annuity A with $9.000 payment per year and 25 years duration? % (Round to two decimal places.) If Nicki could earn 12 percent on her money by placing it in a savings account, should she place it instead in annuity A? (Select the best choice below.) OA. Yes. Nicki should place her money in annuity A because the expected rate of return on the annuity is greater than the one on the savings account. OB. No. Nicki should not place her money in annuity A because the expected rate of return on the annuity is smaller than the one on the savings account b. What rate of return could Nicki earn on her money if she place it in annuity annuity B with $8,000 payment per year and 15 years duration? % (Round to two decimal places.) If Nicki could earn 12 percent on her money by placing it in a savings account, should she place it instead in annuity B? (Select the best choice below.) OA. Yes. Nicki should place her money in annuity B because the expected rate of return on the annuity is greater than the one on the savings account. OB. No. Nicki should not place her money in annuity B because the expected rate of return on the annuity is smaller than the one on the savings account. c. What rate of return could Nicki earn on her money if she place it in annuity annuity C with $6,000 payment per year and 12 years duration? % (Round to two decimal places.) c. What rate of return could Nicki earn on her money if she place it in annuity annuity C with $6,000 payment per year and 12 years duration? % (Round to two decimal places.) If Nicki could earn 12 percent on her money by placing it in a savings account, should she place it instead in annuity C? (Select the best choice below.) OA. Yes. Nicki should place her money in annuity C because the expected rate of return on the annuity is greater than the one on the savings account. OB. No. Nicki should not place her money in annuity C because the expected rate of return on the annuity is smaller than the one on the savings account. Data table (Click on the following icon in order to copy its contents into a spreadsheet.) INITIAL PAYMENT INTO ANNUITY (AT 1-0) $70,000 $50,000 $40,000 ANNUITY A B Done AMOUNT OF MONEY RECEIVED PER YEAR $9.000 $8,000 $6,000 DURATION OF ANNUITY (YEARS) 25 15 12 1 (Solving for r with annuities) Nicki Johnson, a sophomore mechanical engineering student, receives a call from an insurance agent, who believes that Nicki is an older woman ready to retire from teaching. He talks to her about several annuities that she could buy that would guarantee her an annual fixed income. The annuities are as follows in the popup window: If Nicki could earn 12 percent on her money by placing it in a savings account, should she place it instead in any of the annuities? Which ones, if any? Why? CCXX300 a. What rate of return could Nicki earn on her money if she place it in annuity A with $9.000 payment per year and 25 years duration? % (Round to two decimal places.) If Nicki could earn 12 percent on her money by placing it in a savings account, should she place it instead in annuity A? (Select the best choice below.) OA. Yes. Nicki should place her money in annuity A because the expected rate of return on the annuity is greater than the one on the savings account. OB. No. Nicki should not place her money in annuity A because the expected rate of return on the annuity is smaller than the one on the savings account b. What rate of return could Nicki earn on her money if she place it in annuity annuity B with $8,000 payment per year and 15 years duration? % (Round to two decimal places.) If Nicki could earn 12 percent on her money by placing it in a savings account, should she place it instead in annuity B? (Select the best choice below.) OA. Yes. Nicki should place her money in annuity B because the expected rate of return on the annuity is greater than the one on the savings account. OB. No. Nicki should not place her money in annuity B because the expected rate of return on the annuity is smaller than the one on the savings account. c. What rate of return could Nicki earn on her money if she place it in annuity annuity C with $6,000 payment per year and 12 years duration? % (Round to two decimal places.) c. What rate of return could Nicki earn on her money if she place it in annuity annuity C with $6,000 payment per year and 12 years duration? % (Round to two decimal places.) If Nicki could earn 12 percent on her money by placing it in a savings account, should she place it instead in annuity C? (Select the best choice below.) OA. Yes. Nicki should place her money in annuity C because the expected rate of return on the annuity is greater than the one on the savings account. OB. No. Nicki should not place her money in annuity C because the expected rate of return on the annuity is smaller than the one on the savings account. Data table (Click on the following icon in order to copy its contents into a spreadsheet.) INITIAL PAYMENT INTO ANNUITY (AT 1-0) $70,000 $50,000 $40,000 ANNUITY A B Done AMOUNT OF MONEY RECEIVED PER YEAR $9.000 $8,000 $6,000 DURATION OF ANNUITY (YEARS) 25 15 12 1

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To determine the rate of return that Nicki could earn on her money by placing it in each annuity we ... View the full answer