Jim Green wants to receive $5,000 each year for the next 14 years. Assume a 13%...

Question

Question

Jim Green wants to receive $5,000 each year for the next 14 years. Assume a 13% interest rate, compounded annually. How much must Jim invest today?

Answer 1

Answer #1

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

=$5000[1-(1.13)^-14]/0.13

=$5000*6.30248807

=$31512.44(Approx).

Answer 2

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