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Explain how annuities affect TVM problems and investment outcomes with the impact of the following items listed below – this does not have to be exstensively long

a. Interest Rates and Compounding
b. Present Value (of a future payment received)
c. Future Value (of an investment)
d. Opportunity cost
e. Annuities and the Rule of ’72

Pls indicate any sources that may be used

23. Annuities and Interest Rates. Professor’s Annuity Corp. offers a lifetime annuity to retiring professors. For a payment of $80,000 at age 65, the firm will pay the retiring professor $600 a month until death.

a. If the professor’s remaining life expectancy is 20 years, what is the monthly rate on this annuity?

What is the effective annual rate?

b. If the monthly interest rate is .5 percent, what monthly annuity payment can the firm offer to the retiring professor?

Jane is a finance major at a university and has a $600 overdue debt for books and supplies at the bookstore. She has only $200 in her checking account and doesn’t want her father to know about this debt. The manager at the bookstore tells her that she may settle the account in one of two ways since she cannot pay it all now.

Option 1: Pay $200 now and $450 when she completes her degree, two years from today.

Option 2: Pay $800 one year after completion of her undergraduate degree program, three years from today.

Assuming that the cost of money is the only factor in Jane’s decision and that the cost of money is 8%, which alternative should she choose? Why? Support you answer with computations and label all items in you analysis.

I want to buy a car.

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I want to buy a car. I can get a loan for $6,000.00 at a 12% interest rate. I can afford $230.00 a month for payments. How long will it take me to pay off the loan.

You deposit $1,000 in your bank account. If the bank pays 4 percent simple interest, how much will you accumulate in your account after 10 years? What if the bank pays compound interest? How much of your earnings will be interest on interest?