What price should the company set on the annuity contract

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Reference no: EM131360833

County Ranch Insurance Company wants to offer a guaranteed annuity in units of $200, payable at the end of each year for 10 years. The company has a strong investment record and can consistently earn 12 % on its investments after taxes. If the company wants to make 1% on this contract, what price should it set on it? Use 11 % as the discount rate. Assume it is an ordinary annuity and the price is the same thing as present value.

What price should the company set on the annuity contract?

(Round to the nearest cent.)

Reference no: EM131360833

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