If you have an annuity due that pays $10,000 annual payments for 10 years starting today,...

If you have an annuity due that pays $10,000 annual payments for 10 years starting today, what is it worth right now if it is discounted at 10%?

Expert Solution

Present value of annuity due=(1+rate)*Annuity[1-(1+interest rate)^-time period]/rate

=1.1*10,000*[1-(1.1)^-10]/0.1

=10,000*6.75902382

which is equal to

=$67590.24(Approx)

jeff jeffy answered 1 year ago

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