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correct,P5-23 (similar to) Value of a retirement annuity Personal Finance Problem An insurance agent is trying to sell you an​ annuity, that will provide you with ​$9 comma 800 at the end of each year for the next 25 years. If you​ don't purchase this​ annuity, you can invest your money and earn a return of 5​%. What is the most you would pay for this annuity right​ now?

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mltn1980

Answer:

  • What is the most you would pay for this annuity right​ now?

$ 138.121  

Explanation:

The annuity formula is as follows:

Annuity : Annuity * ((1-1/(1+r)^t)/r    where

r : Rate of return

t : Quantity of years of the annuity.

Annuity : ( ( 1- 1/ (1+0,05) ^ 25 ) / 0,05   = ( 1 - 0,295 ) / 0,05 =  14,09

$9,800 * 14,09 =  $ 138,121

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