You have a chance to buy an annuity that pays $3,300 at the beginning of each year for 3 years. You could earn 5. 5% on your money in other investments with equal risk. What is the most you should pay for the annuity?.

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08-02-2022
Business

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You have a chance to buy an annuity that pays $3,300 at the beginning of each year for 3 years. You could earn 5. 5% on your money in other investments with equal risk. What is the most you should pay for the annuity?.

Sagot :

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ewomazinoade ewomazinoade · Answer 1 · 2022-02-16T04:35:21-05:00

At most, what you should pay for the annuity is $8,903.18.

What should you pay at most for the annuity?

In order to determine the required value, the present value of the annuity should be determined. The present value is the sum of discounted cash flows.

Discounted cash flow from year 1 to 3 = (3300 / 1.055) + (3300 / 1.055²) + (3300 / 1.055³) = $8,903.18

To learn more about present value, please check: https://brainly.com/question/25748668

You have a chance to buy an annuity that pays $3,300 at the beginning of each year for 3 years. You could earn 5. 5% on your money in other investments with equal risk. What is the most you should pay for the annuity?.

Sagot :

What should you pay at most for the annuity?

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