Value of a retirement annuity Penkorrel Finance Problem An Insurance agent is trying to sell you an annuity, that wil provide you with $14,600 at the and of each year for the next 35 years, If you don't purchase this annuity, you can invest your motley and earn a return of VA

Finance Jun 06, 2021

Value of a retirement annuity Penkorrel Finance Problem An Insurance agent is trying to sell you an annuity, that wil provide you with $14,600 at the and of each year for the next 35 years, If you don't purchase this annuity, you can invest your motley and earn a return of VA. What is the most you would pay for this annuity right now? Ignoring taxes, the most you would pay for this annuity is $1], {Round to the nearest cent.)

Expert Solution

Computation of Present Value of Annuity:

Present Value of Annuity = Annuity*[1-(1+Interest Rate)^-Time Period]/Rate

$14,600*[1-(1.06)^-35]/0.06

=$14,600*14.49825

Present Value of Annuity = $211,674.40

So, the most you would pay for this annuity is $211,674.40

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