Register
Garrett has many annuity that pays $2,460 at the beginning of each year. If the economy grows at a rate of 2.35% semiannually, what is the value of the annuity if he received it in a lump sum now rather
140k views
5 votes
Garrett has many annuity that pays $2,460 at the beginning of each year. If the economy grows at a rate of 2.35% semiannually, what is the value of the annuity if he received it in a lump sum now rather than over a period of nine years?

User Liliane
by
8.7k points

1 Answer

4 votes
FV value of the amount using future value annuity will be:
FV=P[(1+r)^n-1]/r
FV=2460[(1+0.01175)^18-1]/(0.01175)
FV=48,992.23

The present value of this amount will be:
PV=pe^(-rt)
PV=48992.23e^(-0.0235*9)
PV=39,652.81
User Cobrexus
by
7.6k points
Ask a Question
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.5m questions

12.2m answers

Other Questions

How do you can you solve this problem 37 + y = 87; y =
A bathtub is being filled with water. After 3 minutes 4/5 of the tub is full. Assuming the rate is constant, how much longer will it take to fill the tub?
Write words to match the expression. 24- ( 6+3)
A dealer sells a certain type of chair and a table for $40. He also sells the same sort of table and a desk for $83 or a chair and a desk for $77. Find the price of a chair, table, and of a desk.
The cost of 5 similar digital cameras and 3 similar video cameras is 3213. Each video camera costs 4 times as much as each digital camera. John buys a digital camera and a video camera. How much does he
Link Copied!