Appendix B Appendix D You are offered an annuity that will pay $11,000 a year for...
Appendix B
Appendix D
You are offered an annuity that will pay $11,000 a year for twelve years (that is, twelve payments), but the payments start after six years have elapsed. If you want to earn 7 percent on your funds, what is the maximum you should pay for this annuity? Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar.
Homework Answers
Value at year 5 = Payments * annuity factor from table
Value at year 5 = 11,000 * 7.943
Value at year 5 = 87,373
Present value = Future value * factor from table
Present value = 87,373 * 0.713
Present value = $62,270
Maximum payment should be $62,270
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Appendix B
Appendix D
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Appendix B Appendix D You buy a mutual fund for $1,000. It annually distributes $80 for...
Appendix B
Appendix D
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Appendix A
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$
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