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Severs on has an annuity due that pays $400 per year for 20 years. What is the value of the cash flow 20 years from today if they are placed in an account that earns 7.50%
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33 votes
33 votes
Severs on has an annuity due that pays $400 per year for 20 years. What is the value of the cash flow 20 years from today if they are placed in an account that earns 7.50%

User Kamil Kulig
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2.9k points

1 Answer

25 votes
25 votes
400e^(0.075)(20)
400e^(1.5)
400(4.48168)
=1,792.67562
Or 1,792.68 rounded to the nearest cent
User Isotrope
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2.6k points
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