Question
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
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