Please help and I will rate you :) Suppose you just bought a 12-year annuity of
ID: 2692736 • Letter: P
Question
Please help and I will rate you :) Suppose you just bought a 12-year annuity of $16,700 per year at the current interest rate of 14.25 percent per year. Requirement 2: What happens to the value of your investment if interest rates suddenly drop to 9.25 percent? (Do not include the dollar sign ($). Enter rounded answer as directed, but do not use the rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Value of investment $ Requirement 3: What happens to the value of your investment if interest rates suddenly rise to 19.25 percent? (Do not include the dollar sign ($). Enter rounded answer as directed, but do not use the rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Value of investment $Explanation / Answer
Requirement 2: New value of investment = 16,700/1.0925 + 16,700/1.0925^2 + 16,700/1.0925^3 .........16,700/1.0925^12 =1,18,092.70 Requirement 3: New value of investment = 16,700/1.1925 + 16,700/1.1925^2 + 16,700/1.1925^3 .........16,700/1.1925^12 =76,263.01