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American General offers a 11-year annuity with a guaranteed rate of 4 88% compounded annually How muc How much should a customer pay for this annuity? S(Round to the nearest cent)
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Answer #1

Present value of annuity=Annuity[1-(1+interest rate)^-time period]/rate

=$1000[1-(1.0488)^-11]/0.0488

=$1000*8.35901239

which is equal to

=$8359.01(Approx).

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