afeiyza
Aug 27, 2009, 08:57 AM
Question:
Value of a retirement annuity: An insurance agents is trying to sell you an immediate-retirement annuity,which for a single amount paid today will provide you with $12,000 at the end of each year for the next 25 years. You currently earn 9% on low-risk investment comparable to the retirement annuity. Ignoring taxes,what is the most you would pay for this annuity?
My Answer:
I=interest, n=year
A=FVAn/FVIFAi,n
=$12,000/(FVIFA9%,25)
=$12,000/84.699
=$141.68
Is it correct?
Please help me!
Value of a retirement annuity: An insurance agents is trying to sell you an immediate-retirement annuity,which for a single amount paid today will provide you with $12,000 at the end of each year for the next 25 years. You currently earn 9% on low-risk investment comparable to the retirement annuity. Ignoring taxes,what is the most you would pay for this annuity?
My Answer:
I=interest, n=year
A=FVAn/FVIFAi,n
=$12,000/(FVIFA9%,25)
=$12,000/84.699
=$141.68
Is it correct?
Please help me!