Question

Scott Rolen, major league third baseman, agrees to defer $5 million from his salary this year for 10 years at 7 percent compounded annually. Beginning exactly 10 years from today the team will pay the first payment of Mr. Rolen’s deferred salary as a 10-year annuity at 7 percent compounded annually. What will be the amount of this annuity payment?

Answer 1

What will be the amount of this annuity payment?

$711.888

Step-by-step explanation:

N Monthly principal interest Net value

5.000.000

1 711.888 361.888 350.000 4.638.112

2 711.888 387.220 324.668 4.250.893

3 711.888 414.325 297.562 3.836.568

4 711.888 443.328 268.560 3.393.240

5 711.888 474.361 237.527 2.918.879

6 711.888 507.566 204.322 2.411.313

7 711.888 543.096 168.792 1.868.218

8 711.888 581.112 130.775 1.287.106

9 711.888 621.790 90.097 665.315

10 711.888 665.315 46.572 (0)