Question

Waterway Industries is considering investing in an annuity contract that will return $37,000 annually at the end of each year for 15 years.

Click here to view the factor table 1.
Table 2
Table 3
Table 4

What amount should Waterway Industries pay for this investment if it earns an 9% return? (For calculation purposes, use 5 decimal places as displayed in the factor table provided, e.g. 5.25741. Round answer to 2 decimal places, e.g. 25.25.)

Waterway Industries should pay

$enter the amount that the company should pay in dollars

Answer 1

Year	Cash Flow	Pv factor @9%	Present Value
1	37,000	0.91743	33,944.91
2	37,000	0.84168	31,142.16
3	37,000	0.77218	28,570.66
4	37,000	0.70843	26,211.91
5	37,000	0.64993	24,047.41
6	37,000	0.59627	22,061.99
7	37,000	0.54703	20,240.11
8	37,000	0.50187	18,569.19
9	37,000	0.46043	17,035.91
10	37,000	0.42241	15,629.17
11	37,000	0.38753	14,338.61
12	37,000	0.35553	13,154.61
13	37,000	0.32618	12,068.66
14	37,000	0.29925	11,072.25
15	37,000	0.27454	10,157.98
Total	555,000		298,245.53

Waterway Industries should pay

$ 298,245.53