Asked by
Monique Alyssa
on Dec 14, 2024
Verified
Calculate the present value of a deferred annuity of 20 annual payments of $25,000 each The interest rate is 8.5% compounded annually and the first payment will be made in six years.
A) $306,472
B) $211,760
C) $157,339
D) $145,013
E) $104,289
Deferred Annuity
An insurance product that delays payments of income, installments, or a lump sum until the investor elects to receive them.
Compounded Annually
Interest calculation where the interest is added to the principal sum so that the added interest also earns interest from then on, done once a year.
- Determine the present value of regular annuities and annuities with delayed payments.
- Delve into the fundamental principles of calculating the time value of money.
- Apply financial mathematical concepts to dissect and resolve real-world financial complications related to savings, loans, and investments.
Verified Answer
NC
Learning Objectives
- Determine the present value of regular annuities and annuities with delayed payments.
- Delve into the fundamental principles of calculating the time value of money.
- Apply financial mathematical concepts to dissect and resolve real-world financial complications related to savings, loans, and investments.