Question

# Kristi is considering an investment that will pay \$15,000 a year for 10 years, first payment...

Kristi is considering an investment that will pay \$15,000 a year for 10 years, first payment received one year from today. How much should she pay for this investment if she wishes to earn a 7 percent rate of return?

Present value of annuity=Annuity[1-(1+interest rate)^-time period]/rate

=\$15000[1-(1.07)^-10]/0.07

=\$15000*7.023581541

which is equal to

=\$105,353.72(Approx).

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