April Stigum will receive a 6 year annuity of $2,000 per year, beginning 7 years from today. In other words, the first payment w

Question

3 years ago

7

April Stigum will receive a 6 year annuity of $2,000 per year, beginning 7 years from today. In other words, the first payment w

ill be made at the end of year 7. Assuming a required rate of return of 10%, calculate the present value today of her annuity. (Enter a positive value and round to 2 decimals

Business

1 answer:

melomori [17] · Answer 1 · 2022-03-31T06:53:10+03:00

melomori [17]3 years ago

8 0

Answer:

The present value today of her annuity=$4,469.87

Explanation:

Step 1 find An

An=R[1-(1+i)^-n] : i

An=(2000[1-(1+0.10)^-6]) :0.10

An=$8,710.52

Step 2 find Present value today

An=S

P=S(1+i)^-n

P=8,710.52(1+0.10)^-7

P=$4,469.87