Explore BrainMass

Explore BrainMass

    Annuity Calculations

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    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?

    © BrainMass Inc. brainmass.com February 24, 2021, 2:25 pm ad1c9bdddf
    https://brainmass.com/economics/finance/19510

    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

    ADVERTISEMENT