Calculating the fair value of given annuity
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You have a chance to buy an annuity that pays $5,000 at the beginning of each year for 5 years. You could earn 4.5% on your money in other investments with equal risk. What is the most you should pay for the annuity?
a. $20,701
b. $21,791
c. $22,938
d. $24,085
e. $25,289
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Solution Summary
The solution calculates the appropriate value of given annuity.
Education
- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India
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