5 parts to question P6-4 (similar to) Question Help (Related to Checkpoint 6.2) (Present...
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P6-4 (similar to) Question Help (Related to Checkpoint 6.2) (Present value of an ordinary annuity) Nicki Johnson, a sophomore mechanical engineering student, receives a call from an insurance agent who believes that Nicki is an older woman who is ready to retire from teaching. He talks to her about several annuities that she could buy that would guarantee her a fixed annual income. The annuities are as follows: Purchase Price of the Annuity Annuity (At t = 0) A $40,000 B $60,000 $70,000 (Click on the icon in order to copy its contents into a spreadsheet.) Amount of Money Received Per Year $7,500 $8,500 $8,000 Duration of the Annuity (Years) 10 15 16 Nicki could earn 9 percent on her money by placing it in a savings account. Alternatively, she could place it in any of the above annuities. Which annuities in the table above, if any, will earn Nicki a higher return than investing in the savings account earning 9 percent? a. If Nicki could earn 9 percent on her money, what is the present value of annuity A with $7,500 payments per year and 10 years duration? $ (Round to the nearest cent.)
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