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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?

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