Question

You are offenend an annuity that will pay $ 24000 per year for 11 years (the first payment will occure one year from today), if you feel that appropriate discount rate is 13%, what is the annuity worth to you today?​

Answer 1

Answer:

So, current value of annuity is $136,486.59 or $136,487

Step-by-step explanation:

Annual Payment = S24,000

Period = 11 years

Discount Rate = 13%

Using financial calculator:

I-13%

N=11

PMT = 24000

FV=0

PV=-136486.59

Answer 2

Answer:

Step-by-step explanation:

P=A [1-1/(((〖1+r)〗^n)/r)]

P=24000 [1-1/(((〖1+0.13)〗^11)/0.13)]

P=24000 [1-1/(((〖1+0.13)〗^11)/0.13)]

P=24000 [1-1/(〖3.8358〗^ /0.13)]

P=24000 [1- 0.26069/0.13]

P=24000 [ 0.739/0.13]

P=24000 X 5.684

P=$136,416