Answered

Welcome to Westonci.ca, where curiosity meets expertise. Ask any question and receive fast, accurate answers from our knowledgeable community. Discover a wealth of knowledge from experts across different disciplines on our comprehensive Q&A platform. Our platform offers a seamless experience for finding reliable answers from a network of knowledgeable professionals.

If you put up $25,000 today in exchange for a 8.50 percent, 19-year annuity, what will the annual cash flow be

Sagot :

Cricetus

Answer:

The right solution is "$2697.54".

Explanation:

Given:

Interest rate,

r = 8.50%

or,

 = 0.085

Number of periods,

n = 19

Present value,

= $25,000

As we know,

⇒  [tex]Present \ value=C\times \frac{[1-(1+5)^{-n}]}{r}[/tex]

By substituting the values, we get

⇒                [tex]25000=C\times \frac{[1-(1+0.085)^{-19}]}{0.085}[/tex]

⇒                 [tex]2125=C\times [1-0.21224378136][/tex]

⇒                 [tex]2125=C\times 0.787756219[/tex]

⇒                     [tex]C=\frac{2125}{0.787756219}[/tex]

⇒                         [tex]=2697.54[/tex] ($)

Thanks for using our platform. We're always here to provide accurate and up-to-date answers to all your queries. Thank you for choosing our platform. We're dedicated to providing the best answers for all your questions. Visit us again. Get the answers you need at Westonci.ca. Stay informed by returning for our latest expert advice.