# Annuity Calculations

Please include with your response any necessary formula to solve this problem (on a regular calculator, NOT a financial calculator), along with a detailed explanation of how to solve the problem.

You are offered an annuity of $10,000 for 10 years starting four years from now. With interest rates at 5%, how much should you be willing to pay for this today?

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#### Solution Preview

We should calculate the present value of each payment of the annuity at the end of 4th year:

The formula is PV= Annuity/(1+r)^n

Where Annuity=10000, r= 5%, and n = ...

#### Solution Summary

The solution answers the question(s) below.

$2.19