Annuity rate of return
[DOC File]1 - University of Texas at Dallas
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b. Annuity B is an annuity due. c. Annuity A has a higher future value than annuity B. d. Annuity B has a higher present value than annuity A. e. Both annuities have the same future value as of ten years from today. 6. As the discount rate increases, the present value of $500 to be received six years from now: a. remains constant. b. also ...
[DOC File]1 - University of Texas at Dallas
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b. Option A is the better choice of the two given any positive rate of return. c. Option B has a higher present value than option A given a positive rate of return. d. Option B has a lower future value at year 5 than option A given a zero rate of return. e. Option A is preferable because it is an annuity due. a 8.
[DOC File]Chapter 3 Time Value of Money
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1.4.1 Present value (PV) is the cash equivalent now of a sum of money receivable or payable at a stated future date, discounted at a specified rate of return. 1.4.2 Discounting starts with the future value, and converts a future value to a present value.
[DOC File]Overview of Grantor Retained Annuity Trusts
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A GRAT is a more attractive technique when the section 7520 rate is low. As the section 7520 rate decreases, the value of the retained interest in a GRAT will increase. This occurs because a decrease in the assumed rate of return makes the right to receive fixed amounts in the future more valuable.
[DOC File]Annuity Rates Drop Again - SeniorLeads
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Annuity rates are a lot lower than they used to be and you can expect rates to continue dropping. These lower rates will affect your annuity, too, when it comes up for its annual rate adjustment. Many annuity companies just keep dropping their rates and take advantage of you.
[DOC File]JustAnswer
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What rate of return is built into the annuity? a. 2.79% b. 3.10% c. 3.44% d. 3.79% e. 4.17% . 4. An investment costs $1,000 (CF at t = 0) and is expected to produce cash flows of $75 at the end of each of the next 5 years, then an additional lump sum payment of $1,000 at the end of the 5th year. What is the expected rate of return on this ...
[DOC File]Solutions Guide: Please reword the answers to essay type ...
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The investment should not be undertaken because the internal rate of return of 15% is less than the required rate of 18%. Initial outlay $100,000. Annuity amount 20,000. Outlay ÷ annuity amount = PV of . annuity factor 5.00. Internal rate of return 15%. EXERCISE 9-11.
[DOC File]ANSWERS TO REVIEW QUESTIONS
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An increasing required rate of return would reduce the present value of a future amount, since future dollars would be worth less today. Looking at the formula for present value in question 5, it should be clear that by increasing the i value, which is the required return, the present value interest factor would decrease, thereby reducing the ...
[DOC File]CHAPTER 7: Financial Budgeting - CPA Diary
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d. The book rate of return is 14%. a 19. The technique most concerned with liquidity is. a. payback. b. NPV. c. IRR. d. book rate of return. d 20. The technique that does NOT use cash flows is. a. payback. b. NPV. c. IRR. d. book rate of return. a 21. If there were no income taxes, a. depreciation would be ignored in capital budgeting.
[DOC File]Lecture Notes on Time Value of Money
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The arithmetric average rate of return is 12%, what is the geometric average rate of return? Answer: An average rate of return is a geometric average since it is a rate of growth. The 12% is the arithmetic average. The geometric average rate of return on the investment was 11.7%. i = (FV/PV)1/t-1 = (12,480/10000)1/2-1 = .1171. OR
[DOCX File]VM-21: Requirements for Principle-Based Reserves for ...
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For example, for a variable payout annuity for which a specific number of units is payable, the implicit amount could be the present value of that number of units, discounted at the Assumed Investment Return and defined mortality, times the unit value as of the valuation date.
[DOC File]CHAPTER 1
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Assume a 4 percent inflation rate and work out a spending program for your retirement that will allow you to maintain a level real expenditure during retirement. This is an annuity problem with the present value of the annuity equal to $2 million (as of your retirement date), and the interest rate equal to 8 percent, with 15 time periods.
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