Question
Suppose a retiree wants to buy an ordinary annuity that pays her $2,000 per month for 20 years. If the annuity earns interest at 3.5% interest compounded monthly, what is the present value of this annuity?
Answers
This is the same old problem. Just using different data.
r = 1 + .035/12 = 1.0029166666
2000 (r^240 - 1)/(r-1)
= 2000 * 1.011702/0.00291666
= $693,738.70
Before posting another of these, try using the formula.
r = 1 + .035/12 = 1.0029166666
2000 (r^240 - 1)/(r-1)
= 2000 * 1.011702/0.00291666
= $693,738.70
Before posting another of these, try using the formula.
Suppose a retiree wants to buy an ordinary annuity that pays her $2,000 per month for 20 years. If the annuity earns interest at 3.5% interest compounded monthly, what is the present value of this annuity?
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