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Assume the appropriate discount rate is 8%. What is the value 10 years from today of...

Assume the appropriate discount rate is 8%. What is the value 10 years from today of an annuity that makes payments of $5,000 per year if the first payment is made 11 years from now and the last payment is made 18 years from now?

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Expert Solution

value 10 years from today of an annuity that makes payments of $5,000 per year if the first payment is made 11 years from now and the last payment is made 18 years from now = payment * (1 - (1 + r)^(-n))/r

= 5000 * (1 - (1.08)^(-8))/.08
= 5000 * (1 - .540269)/.08

= $28733.19

jeff jeffy answered 2 years ago
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