Uncle Bob is about to retire and he wants to buy an annuity that will provide...

Uncle Bob is about to retire and he wants to buy an annuity that will provide him with $8400 of income a year for 30 years with the first payment coming immediately the going rate on such annuities is 15.25% how much would it cost him too buy the annuity today

Expert Solution

year	opening principal	repayment	interest	capital portion	closing balance
1	$54,302.53	8,400.00	8281.136	118.86418	$54,183.67
2	$54,183.67	8,400.00	8263.009	136.99096	$54,046.67
3	$54,046.67	8,400.00	8242.118	157.88208	$53,888.79
4	$53,888.79	8,400.00	8218.041	181.9591	$53,706.83
5	$53,706.83	8,400.00	8190.292	209.70786	$53,497.13
6	$53,497.13	8,400.00	8158.312	241.68831	$53,255.44
7	$53,255.44	8,400.00	8121.454	278.54578	$52,976.89
8	$52,976.89	8,400.00	8078.976	321.02401	$52,655.87
9	$52,655.87	8,400.00	8030.02	369.98017	$52,285.89
10	$52,285.89	8,400.00	7973.598	426.40215	$51,859.49
11	$51,859.49	8,400.00	7908.572	491.42848	$51,368.06
12	$51,368.06	8,400.00	7833.629	566.37132	$50,801.69
13	$50,801.69	8,400.00	7747.257	652.74295	$50,148.94
14	$50,148.94	8,400.00	7647.714	752.28625	$49,396.66
15	$49,396.66	8,400.00	7532.99	867.0099	$48,529.65
16	$48,529.65	8,400.00	7400.771	999.22891	$47,530.42
17	$47,530.42	8,400.00	7248.389	1151.6113	$46,378.81
18	$46,378.81	8,400.00	7072.768	1327.232	$45,051.57
19	$45,051.57	8,400.00	6870.365	1529.6349	$43,521.94
20	$43,521.94	8,400.00	6637.096	1762.9043	$41,759.04
21	$41,759.04	8,400.00	6368.253	2031.7472	$39,727.29
22	$39,727.29	8,400.00	6058.411	2341.5886	$37,385.70
23	$37,385.70	8,400.00	5701.319	2698.6809	$34,687.02
24	$34,687.02	8,400.00	5289.77	3110.2297	$31,576.79
25	$31,576.79	8,400.00	4815.46	3584.5397	$27,992.25
26	$27,992.25	8,400.00	4268.818	4131.182	$23,861.07
27	$23,861.07	8,400.00	3638.813	4761.1873	$19,099.88
28	$19,099.88	8,400.00	2912.732	5487.2684	$13,612.61
29	$13,612.61	8,400.00	2075.923	6324.0768	$7,288.53
30	$7,288.53	8,400.00	1111.502	7288.4985	$0.04

jeff jeffy answered 2 years ago

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