Abigail wishes to purchase an annuity which will pay her $2250 at the end of each...

Abigail wishes to purchase an annuity which will pay her $2250 at the end of each month for 10 years. The rate of interest on the annuity is 6% compounded monthly. Find the present value of this cash flow.

Expert Solution

PV =

r = 6%/12 = 0.5% (monthly), n = 10 * 12 = 120 months

PV = 2250 * 90.07345

PV = $198,161.60

jeff jeffy answered 2 years ago

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Abigail wishes to purchase an annuity which will pay her $2250 at the end of each...

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