Your rich uncle dies, leaving you a life insurance policy worth $120,000. Theinsurance company also offers you an option to receive $8,225 per year for 25 years,with the first payment due today. You should choose the immediate payout if theinterest rate is greater thana. 5.27%b. 5.76%C. 7.75%d. 4.66%

We should choose immediate payout if the interest rate is greater than 5.27% Option a) is…

Answered: Your rich uncle dies, leaving you a…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

You are the beneficiary of a life insurance policy. The insurance company informs you that you have two options for receiving the insurance proceeds. You can receive a lump sum of $50,000 today or receive payments of $641 a month for 10 years. You can earn 6.50% on your money. What option should you take and why?
Your rich uncle named you beneficiary of his life insurance policy. The insurance company gives you a choice of 100,000 today of a 12-year annuity of P12, 000 at the end of each year. What rate of return is the insurance company offering?
As the beneficiary of a life insurance policy, you have two options for receiving the insurance proceeds. You can receive a lump sum of $200,000 today or receive payments of $1,400 a month for 20 years. If you can earn 6 % annual rate on your money, which option should you take and why? Group of answer choices You should accept the payments because they are worth $336,000 to you today. You should accept the payments because they are worth $247,800 to you today. You should accept the $200,000 because the payments are only worth $189,311 to you today. You should accept the payments because they are worth $209,414 to you today. You should accept the $200,000 because the payments are only worth $195,413 to you today.
Your uncle named you beneficiary of his life insurance policy. The insurance companygives you a choice of $100,000 today or a 12-year annuity of $12,000 at the endof each year. What rate of return is the insurance company offering? (6.11%)
The Real Deal Life Insurance company is offering to you to purchase a policy that will pay you, your children, your grandchildren, and all your heirs $ 37, 000 every year forever. The required return on this policy is 6.3 percent. What is the maximum amount of money that you should be willing to pay for this policy? (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.)
You are the beneficiary of a life insurance policy. The insurance company informs you that you have two options for receiving the insurance proceeds. You can receive a lump sum of $200,000 today or receive payments of $1,400 a month for 20 years. You can earn 6 percent on your money. Which option should you take and why?
A life insurance co. is trying to sell you an investment policy that will pay you and your heirs $15,199 per year forever. If the policy costs $428,853 today, at what interest rate (in percent) is it properly priced? Answer to two decimals.
The Eternal Gift Insurance Company is offering you a policy that will pay you and your heirs $10,000 a year forever. The cost of the policy is $285,000. What is the rate of return on this policy if the payment starts today? answer is 3.64%
Suppose you deposited $39,000 in a bank account that pays 5.25% with daily compounding based on a 360-day year. How much would be in the account after 8 months, assuming each month has 30 days? Select the correct answer. O a. $40,389.07 O b. $40,375.67 O c. $40,402.47 d. $40,368.97 Oe. $40,382.37
Your friend offers to pay you an annuity of $6,800 at the end of each year for 3 years in return for cash today. You could earn 5.5% on your money in other investments with equal risk. What is the most you should pay for the annuity? Select the correct answer. a. $18,349.15 b. $18,345.95 c. $18,342.75 d. $18,339.55 e. $18,336.35
Your uncle named you beneficiary of his life insurance policy. The insurance company gives you a choice of ,100,000 or a 12 year annuity of 12,000 at the end of each year. What rate of return is the insurance company offering
You are considering two insurance settlement offers. The first offer includes annual payments of $45,000 a year for 12 years with the first payment made at the beginning of the year. The other offer is the payment of one lump sum amount at the beginning of the year. You are trying to decide which offer to accept given the fact that your discount rate is 7%. What is the mininum amount that you will accept if you are to select the lump sum offer? • A. $540,000.00 • в. $357,420.88 • C. $412,738.96 • D. $382,440.35 • E. $437,358.40

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