You are offered an annuity that will pay you $25,000 at the end of each year...

Transcribed Image Text:

You are offered an annuity that will pay you $25,000 at the end of each year for the rest of your life. If the applicable market interest rate is 3.3%, and you plan. on living until age 90, what would you be willing to pay for this annuity at age 25? 3.3% 25,000 90 25 665,763 What would be the value of the same annuity as described in problem 1 if the annuity payment were to be made at the beginning of the year? You are offered an annuity that will pay you $25,000 at the end of each year for the rest of your life. If the applicable market interest rate is 3.3%, and you plan. on living until age 90, what would you be willing to pay for this annuity at age 25? 3.3% 25,000 90 25 665,763 What would be the value of the same annuity as described in problem 1 if the annuity payment were to be made at the beginning of the year?

Answer rating: 100% (QA)

To find the present value of the annuity where payments are made at the end of each year we can use ... View the full answer