To start a restaurant in Itaewon, South Korea, Park Jihyun gets a loan plan from a private agency. The loan will pay him $40,000 at the beginning and a similar amount for the next five years in equal monthly installments. To pay the 61 installments, the agency purchased an annuity due at the interest rate of 3% compounded monthly. How much did the annuity cost the agency?

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To find the cost of the annuity we need to calculate the present value of the future paym... View the full answer