# This problem demonstrates the dependence of the present value of an annuity on the number of payments.

## Question:

a. 5 years.

b. 10 years.

c. 20 years.

d. 30 years.

e. 100 years.

f. 1000 years.

Observe that the present value increases with increasing n, but at a diminishing rate. In this case, the 970 payments from Year 30 to Year 1000 cause the present value to increase by just 15%.

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,...

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