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September 20, 2014

Homework Help: Finance

Posted by John on Monday, September 29, 2008 at 11:58am.

Need help finding a formula for:

Question:

Suppose a bank offers you the following deal:

You pay to the bank an annuity amount of $A per year over the next 10 years and the bank will in turn pay you $40,000 per year starting at the end of year 11 and ending the payments by the end of year 30.

Interest rate=10%/year throughout the 30 year period.

Find the annuity amount of $A you will be willing to pay over the next 10 yrs.

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