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1 vote
How do I solve this? What formula?

Aaron has an annuity that pays him $9200 at the beginning of each year. Assume the economy will grow at a rate of 3.2% annually. What is the value of the annuity if he received it now instead of over a period of 10 years?
1)
$109,850.52


2)
$106,444.30


3)
$77,682.00


4)
$80,168.75

I chose #4 but I want to be sure.

User SergeyB
by
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2 Answers

5 votes

Answer:

Explanation:

User Tadeuzagallo
by
7.6k points
3 votes
Yeah your answer was correct because the present value of annuity due is
PVAD=9,200×(((1−(1+0.032)^(−10))
÷(0.032))×(1+0.032))
=80,168.75

Hope it helps
User Aush
by
7.3k points