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algebra

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Suppose a retiree wants to buy an ordinary annuity that pays her $2,000 per month for 20 years. If the annuity earns interest at 3.5% interest compounded monthly, what is the present value of this annuity?

  • algebra - ,

    This is the same old problem. Just using different data.

    r = 1 + .035/12 = 1.0029166666

    2000 (r^240 - 1)/(r-1)
    = 2000 * 1.011702/0.00291666
    = $693,738.70

    Before posting another of these, try using the formula.

  • algebra - ,

    Suppose a retiree wants to buy an ordinary annuity that pays her $2,000 per month for 20 years. If the annuity earns interest at 3.5% interest compounded monthly, what is the present value of this annuity?

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