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Sagot :
Answer:
$40,511.23
Explanation:
This is a case of growing annuity and the amount invested in the annuity of $210,000 is the present value of the growing annuity, hence, using the present value formula of a growing annuity as shown thus
PV=(C/r-g*)(1-(1+g)^T/(1+r)^T)
PV=$210,000
C=first annual payment=unknown
r=rate of return=8%
g=growing rate=5%
T=number of years that annual payments would be received=6
$210,000=C/8%-5%*(1-(1+5%)^6/(1+8%)^6))
$210,000=C/0.03*(1-(1+0.05)^6/(1+0.08)^6
$210,000=C/0.03*(1-(1.05)^6/(1.08)^6))
$210,000=C/0.03*(1-(1.3400956406/1.5868743229)
$210,000=C/0.03*0.1555124300
$210,000=C/0.03*0.1555124300
C=$210,000*0.03/0.1555124300
C=$40,511.23
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