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Suppose an annuity will pay $18,000 at the beginning of each year for the next 8 years. How much money is needed to start this annuity if it earns 6.9%, compounded annually?
14 years ago

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drwls
Do annuity payments stop at death? Or is lump sum payment made to a beneficiary? If either case, age and actuarial data on life expectancy are needed.
14 years ago
Mgraph
The present value of the annuity (due)
An=P*(1-v^n)/(1-v) where v=1/(1+i)
P=18000, n=8, i=0.069

A8=115346
14 years ago

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