Part A: Given the afterward banknote arrival at the end of anniversary year, what is the approaching amount of this banknote breeze at 6%, 9%, and 15% absorption ante at the end of the seventh year?
Year 1 $15,000
Year 2 $20,000
Year 3 $30,000
Years 4 through 6 $0
Year 7 $150,000
Part B: County Ranch Insurance Aggregation wants to action a affirmed accomplishment in units of $500, payable at the end of anniversary year for 25 years. The aggregation has a able advance almanac and can consistently acquire 7% on its investments afterwards taxes. If the aggregation wants to accomplish 1% on this contract, what amount should it set on it? Use 6% as the abatement rate. Assume that it is an accustomed accomplishment and that the amount is the aforementioned as present value.
Part C: A bounded government is about to run a action but does not appetite to be complex in the adjustment if a champ picks an accomplishment payoff. The government affairs with a assurance to pay the lump-sum payout to the assurance and accept the assurance (probably a bounded bank) pay the anniversary payments. The aboriginal champ of the action chooses the accomplishment and will accept $150,000 a year for the abutting 25 years. The bounded government will accord the assurance $2,000,000 to pay for this annuity. What advance amount charge the assurance acquire to breach alike on this arrangement?
Part D: Your dreams of acceptable affluent accept aloof appear true. You accept won the State of Tranquility’s Lottery. The State offers you two acquittal affairs for the $5,000,000 advertised jackpot. You can booty anniversary payments of $250,000 for the abutting 20 years or $2,867,480 today.
a. If your advance amount over the abutting 20 years is 8%, which adjustment will you choose?
b. If your advance amount over the abutting 20 years is 5%, which adjustment will you choose?
c. At what advance amount will the accomplishment beck of $250,000 be the aforementioned as the agglomeration sum acquittal of $2,867,480?
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