Question

Madeline has an annuity that pays $7902 at the beginning of a time twice a year. If the economy grows at a rate of 3.1% twice a year what is the value of the annuity if she received it in a lump sum now rather than over a period of 16 years? (show work)

A= $198,170.44
B= $201,242.08
C= $158,941.50

Answer 1

See the equation of the present value on annuity due
Pvad=7,902×((1−(1+0.031÷2)^(−2×16))÷(0.031÷2))×(1+0.031÷2)=201,242.08