How do I solve this? What formula?
Aaron has an annuity that pays him $9200 at the beginning of each year. Assume the economy will grow at a rate of 3.2% annually. What is the value of the annuity if he received it now instead of over a period of 10 years?
1)
$109,850.52
2)
$106,444.30
3)
$77,682.00
4)
$80,168.75
I chose #4 but I want to be sure.

ANSWERS

2016-09-20 21:12:22

Yeah your answer was correct because the present value of annuity due is PVAD=9,200×(((1−(1+0.032)^(−10)) ÷(0.032))×(1+0.032)) =80,168.75 Hope it helps

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