You have been offered two annuities for the same price. Annuity 1 pays $50,000 per year at the end of the year for 10 years. Annuity 2 pays $40,000 per year at the end of the year for 20 years. If your cost of capital is 10%, which of these two annuities is a better deal, why?© BrainMass Inc. brainmass.com March 21, 2019, 6:55 pm ad1c9bdddf
Here we will calcuate the Present value of annuity under both the situations:
Annuity 1 pays $50,000 per year at the end of the year for 10 ...
The response helps in providing steps of choosing an annuity.