Answer:
Explanation:
To determine the most you should pay for the annuity, you can use the present value formula for an annuity.
PV = C * [(1 - (1 + r)^(-n)) / r]
where PV is the present value, C is the annual cash flow, r is the interest rate, and n is the number of periods.
In this case, C is $1,000, r is 6%, and n is 5 years. Plugging these values into the formula, we get:
PV = $1,000 * [(1 - (1 + 0.06)^(-5)) / 0.06]
PV = $4,212.10
Therefore, the most you should pay for the annuity is $4,212.10. If you pay more than this amount, you would be better off investing your money elsewhere at a 6% interest rate.