Question

a. What is the amount of the annuity purchase required if you wish to receive a fixed payment of $270,000 for 15 years? Assume that the annuity will earn 10 percent per year.
b. Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 15-year annuity is $1.7 million and the annuity earns a guaranteed annual return of 10 percent. The payments are to begin at the end of the current year.
c. Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 15-year annuity is $1.7 million and the annuity earns a guaranteed annual return of 10 percent. The payments are to begin at the end of six years.

(For all requirements, do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16))
a. What is the amount of the annuity purchase required if you wish to receive a fixed payment of $270,000 for 15 years? Assume that the annuity will earn 10 percent per year. b. Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 15-year annuity is $1.7 million and the annuity earns a guaranteed annual return of 10 percent. The payments are to begin at the end of the current year. c. Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 15-year annuity is $1.7 million and the annuity earns a guaranteed annual return of 10 percent. The payments are to begin at the end of six years. (For all requirements, do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16)) a. Present value b. Annual cash flows c. Annual cash flows

Answer 1

a	Present value	$2,053,641.47
b	Annual cash flows	$223,505.42
c	Value of the amount after 5 years	$2,737,867.00
	Annual cash flows	$359,957.72

Workings

Book1- Excel AutoSave Oi Sign in Comments Share File Home Formulas Review View Help OTell me what you want to do Insert Draw Page Layout Data Σ X Insert A A Calibri General 11 Delete Conditional Format as Cell Sort & Find & Paste A- B IU Format T T Formatting Table Filter Select Styles Clipboard Alignment Number Styles Cells Editing Font г. A1 a A В C D E PV(10%,15,-270000) |Present value a 2 Annual cash flows 3 b =PMT(10%,15,-1700000) Value of the amount after 5 years FV(10%,5,-1700000) 5 c PMT(10 %,15,-C5) Annual cash flows 6 7 8 9 10 11 12 13 14 15 16 17 Sheet Sheet2 +100 % Ready E e ENG ха (? 11:32 PM