Question

Billy has an annuity that pays him $9800 at the beginning of each year. Assume the economy will grow at a rate 3.3% annually. What is the value of the annuity if he received it now instead of over a period of 10 years?

Answer 1

Hi there
if he received it now instead of over a period of 10 years then find the present value of annuity due using the formula
Pv=pmt [(1-(1+r)^(-n))÷r]×(1+r)
Pv=9,800×(((1−(1+0.033)^(−10))
÷(0.033))×(1+0.033))
=85,047.46......answer

Hope it helps