Return on the annuity, Finance Basics

An insurance company offers you and end of year annuity of $48,000 per year for the next 20 years. They claim your return on the annuity is 9%. What is the most you would be willing to pay today for this annuity? 

a

Amount offered every year by

   
 

insurance company

   

 mce_markernbsp;                     48,000.00

b

Period (Years)

   

20

c

Interest rate claimed

 

9%

d

Present Value of the annuity

   
 

of 20 years

   

$438,170.19

           
 

Note: Assumed amount received at the end of the year.


 

Posted Date: 7/23/2012 2:08:45 AM | Location : United States







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