What would you pay for an investment that pays you $25000 at the end of each year for the next twenty years? Assume that...
What would you pay for an investment that pays you $25000 at the end of each year for the next twenty years? Assume that the relevant interest rate for this type of investment is 12%.
Homework Answers
Present value of annuity=Annuity[1-(1+interest rate)^-time period]/rate
=25000[1-(1.12)^-20]/0.12
=25000*7.46944362
=$186736.09(Approx).
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