How much would you be willing to pay today for an annuity that promises to pay...

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How much would you be willing to pay today for an annuity that promises to pay...

How much would you be willing to pay today for an annuity that promises to pay $9,554 per year for 19 years, beginning exactly one year from today. Your relevant interest rate is 9 percent.

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Answer 1

Answer #1

PVOrdinary Annuity = C*[(1-(1+i/100)^(-n))/(i/100)]

C = Cash flow per period

i = interest rate

n = number of payments

PV= 9554*((1-(1+ 9/100)^-19)/(9/100))

PV = 85509.4

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Answer 2

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