A 10-year annuity making quarterly payments of 3250 will make its first payment 11 years and...

A 10-year annuity making quarterly payments of 3250 will make its first payment 11 years and 3 months from today. You would like to purchase this annuity 2 years from today. If you want to earn an effective annual rate of 4.5% what should you be willing to pay 2 years from now? Enter your answer below to the nearest dollar.

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Expert Solution

=3250/((1+4.5%)^(1/4)-1)*(1-1/(1+(1+4.5%)^(1/4)-1)^(4*10))*1/(1+(1+4.5%)^(1/4)-1)^(4*11)*(1+(1+4.5%)^(1/4)-1)^(4*2)

=70375.8921

jeff jeffy answered 1 year ago

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