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# solution

Annuity interest rate) Your folks just called and would like some advice from you. An insurance agent just called them and offered them the opportunity to purchase an annuity for \$24,094 52 that will pay thom \$3,000 per year for 20 years. They don’t have the slightest idea what return they would be making on their investment of \$24,094,52 What rate of return would they be earning ?

The annual rate of return your folks would be carrying on their investment is ___%. (Round to two decimal places)
(Related to Checkpoint 6.2) (Present value of annuity payments)
The state lottery’s million dollar payout provides for St million to be paid in 20 installment of \$50,000 per payment. The first \$50,000 payment is made immediately, and the 19 remaining \$50,000 payments occur at the end of each of the next 19 years if 7 percent is the discount rato, what is the present value of this stream of cash flows? If 14 percent is the discount rate, what is the percent value of the cash flows?

a. If 7 percent is the discount rate, the present value of the annuity due is \$_____(Round to the nearest cont.)

(Future value of an annuity)
Upon graduating from college 40 years ago, Dr. Nick Riviera was already planning for his retirement. Since then he has made deposits into a retirement fund on a weekly basis in the amount of \$20. Nick has just completed his final payment and is at last ready to retire. His retirement fund has earned 7 percent compounded weekly. Use five decimal places for the periodic interest rate in your calculations a. How much has Nick accumulated in his retirement account? b. In addition to this, 20 years ago Nick received an inheritance check for \$20,000 from his beloved unde. He decided to deposit the entire amount into his retirement fund What is his current balance in the fund?

a. The amount Nick has accumulated in his retirement account is \$ 229,003,72 (Round to the nearest cont.)

b. The amount the \$20,000 inheritance check has accumulated to over 20 years is \$(Round to the ricarest cont.)

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