A representative from Fiterman Insurance Company offers you an

annuity that pays $$2,500$ at the end of each year for the next $10$ years. If the interest

rate is $5\mathrm{.}75\%,$ using the annuity discount formula,

 $($a$)$  what is the fair price of this annuity today?

$($b$)$ Verify your answer by using the PV function in Excel, 

$($c$)$  Suppose they modify the deal, and offer you an annuity that pays the same coupon, but on a   

 semi$-$annual basis, what is the fair price of this instrument today? 

$($Hint : What is the     Present Value of this annuity? ) . USing STEP BY STEP EXCEL WORKBOOK 

Answer rating: 100% (QA)

Okay here are the stepbystep calculations using Excel a Annual annuity that pays 2500 per year for ... View the full answer