Present Value of Funding Annuity
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P3-28. Determine the annual payment required to fund a future annual annuity of $12,000 per year. You will fund this future liability over the next five years, with the first payment to occur one year from today. The future $12,000 liability will last for four years, with the first payment to occur seven years from today. If you can earn 8 percent on this account, how much will you have to deposit each year over the next five years to fund the future liability?
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Solution Summary
The solution determines the annual payment required to fund a future annual annuity of $12,000 per year and how much will have to be deposited each year over the next five years to fund the future liability (see attachment).
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