Value of an annuity with varying rates of return
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You are considering buying a 3 year, $2500 annuity (annual payments). You receive the first payment in exactly one year. The required rate of return is 10% for year 1, 6% for year 2, and 5% for year 3. What is the value of this annuity?
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Solution Summary
The solution explains how to calculate the value of annuity when the interest rate changes each year. The answer is shown in the solution.
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Given the variant return rate, we have to calculate each payment of the annuity for the ...
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