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In: Finance

An insurance agent is trying to sell you an annuity, that will provide you with $19,800 at the end of each year for the next 30 years.

Value of a retirement annuity  Personal Finance Problem   

An insurance agent is trying to sell you an annuity, that will provide you with $19,800 at the end of each year for the next 30 years. If you don't purchase this annuity, you can invest your money and earn a return of 7%.

What is the most you would pay for this annuity right now?

Ignoring taxes, the most you would pay for this annuity is $______. (Round to the nearest cent.)

Solutions

Expert Solution

The most to be paid is the present value of amount to be received in future

= 19,800*present value annuity factor

= 19,800*PVAF(7%,30 years)

= 19,800*12.409

=$245,698.2

jeff jeffy answered 2 years ago
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