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And insurance agent is trying to sell you an immediate retirement annuity, which for a single...

And insurance agent is trying to sell you an immediate retirement annuity, which for a single amount paid today will provide you with $8000 at the end of each year for the next 15 years, you currently earning 9% on low risk investments comparable to the retirement annuity ignore taxes what is the most you would pay for this annuity?

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Expert Solution

To Answer this question we need to apply time value of money to Annuity.

An annuity is a stream of equal periodic cash flows, over a specified time period. These cash flows are usually annual but can occur at other intervals, such as monthly or quarterly.

The future value of the ordinary annuity is calculated as shown below using Excel spreadsheet.

jeff jeffy answered 2 years ago
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