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atroni [7]
3 years ago
7

Morgan Jennings, a geography professor, invests $95,000 in a parcel of land that is expected to increase in value by 14 percent

per year for the next eight years. He will take the proceeds and provide himself with a 20-year annuity. Assuming a 14 percent interest rate, how much will this annuity be? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
Business
1 answer:
bonufazy [111]3 years ago
5 0

Answer:

The annuity will be $40916.60

Explanation:

Future value of land = Present value of land*(1 + rate)^n

Annuity = Future value of land*rate/(1 - 1/(1 + rate)^t)

             = $95,000*1.14^8*14%/(1 - 1/1.14^20)

             = $40916.55871562

Therefore, The annuity will be $40916.60

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