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(17) Suppose a pension company sells a different kind of annuity. If you buy this annuity, then you will get $45,000 per year for 30 years. But the first cash-flow will be made 5 years from your purchase of the annuity. The interest and discount rates are 2%/year, compounded annually What is the present value of this annuity? (Hint: You need to take 2 steps to find the present value of this different kind of annuity. Compute the present value of this annuity at 4 years from now, not as of today, using the standard annuity formula. Then, compute its present value (as of today) again using the present formula for a single cash-flow treating the answer from the first step as one hypothetical single cashflow in 4 years.) 1. $931,088.84 2. $933,088.84 3. $935,088.84 4. $937,088.84 5. $939,088.84
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Answer #1

Above @ladoteal ig

Decimals are not approximated to 2 digits after decimals for more accurate answer and readers reference.

PVAF Stands for Present Value Annuity Factor

PVF stands for Present Value Factor

hope it helps !!!

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