Ask Question
7 January, 10:34

April received an inheritance from her grandmother in the form of an annuity. The annuity pays $3,000 on January 1st from 1966 through 1984. Find the value of this annuity on January 1, 1966 using an annual effective interest rate of 5% and represent this value by an appropriate annuity symbol.

+5
Answers (1)
  1. 7 January, 12:35
    0
    PV1966 = $35,068.76

    Explanation:

    Giving the following information:

    April received an inheritance from her grandmother in the form of an annuity. The annuity pays $3,000 on January 1st from 1966 through 1984.

    To calculate the value of the annuity in 1966 we need to use the following formula:

    PV = C*{[1 - (1+i) ^-n]/i}

    C = periodic payment

    PV = 3000*{[1 - (1.05^-18) ]/0.05} = $35,068.76
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “April received an inheritance from her grandmother in the form of an annuity. The annuity pays $3,000 on January 1st from 1966 through ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers