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natita [175]
3 years ago
13

Suppose you invest $250,000 in an annuity that returns 5 annual payments, with the first payment one year from now and each subs

equent payment growing by 6%. At an interest rate of 7%, how much is the first annual payment you receive
Business
1 answer:
Leokris [45]3 years ago
5 0

Answer:

$54,508.98

Explanation:

Formula of present value of growing annuity: PVGA = A*[(1 - (1+g)^n/(1+i)^n)) / (i-g)

$250,000 = A*[(1 - (1+0.06)^5/(1+0.07)^5)] / (0.07 - 0.06)

$250,000*(0.01) = A*(1 - (1.06)^5/(1.07)^5)

$250,000*(0.01) = A*(1 - 0.9541363)

$2500 = A * 0.045864

A = $2,500 / 0.045864

A = 54508.983080412

A = $54,508.98

So, the amount of the first annual payment i will receive $54,508.98.

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B. The value of the next most valuable opportunity.

Explanation:

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7 0
4 years ago
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Andrew and Brianna are married and live in Texas, a community-property state. For their birthdays this year Andrew gave cash gif
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Answer: $2,600

Explanation:

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5 0
3 years ago
A disadvantage of corporations is that shareholders have to pay on profits.
olga_2 [115]

Answer:

taxes

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4 0
3 years ago
Intelligent agents are also known as _____.
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4 0
4 years ago
If two individuals are licensed in the same line with two different companies join together to sell a policy, the commission can
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<h3><u>Answer:</u></h3>

The commission can be shared between the two agents.

<h3><u>Explanation:</u></h3>

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