Bridget Jones has a contract in which she will receive the following payments for the next five years $1,000, $2,000, $3,000, $4,000, and $5,000 She will then receive an annuity of $8,500 a year from the end of the 6th through the end of the 15th year The appropriate discount rate is 14 percent If ...

First Five Payments 1 2 3 4 5 Present Value of the Annuity Discou ...

Bridget Jones has a contract in which she will receive the following payments for the next five

Question:

Bridget Jones has a contract in which she will receive the following payments for the next five years: $1,000, $2,000, $3,000, $4,000, and $5,000. She will then receive an of $8,500 a year from the end of the 6th through the end of the 15th year. The appropriate is 14 percent. If she is offered $30,000 to cancel the contract, should she do it?

Annuity
An annuity is a series of equal payment made at equal intervals during a period of time. In other words annuity is a contract between insurer and insurance company in which insurer make a lump-sum payment or a series of payment and, in return,... Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...