An annuity pays $11.00 per year for 103 years. What is the present value (PV) of...

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Question

Answer 1

Answer #1

PV of annuity = P * [1 - (1 + r)-n] / r,

where P = periodic payment.. This is $11

r = interest rate per period. This is 5%.

n = number of periods. This is 103

PV of annuity = $11 * [1 - (1 + 5%)-103] / 5%

PV of annuity = $218.55

Answer 2

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