Maggie is 25 years old. She wants to buy an ordinary annuity that pays $4,000 a year for the next 20 years. She expects interest rate to stay at 8%p.a. over the time period. The maximum price that she should be willing to pay for the annuity is ________.   Question 13 options:   1)  $32,000   2)  $39,272   3)  $40,000   4)  $80,000

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Amortized Loans

The term "amortization" refers to spreading the value of a loan or a debt over a series of regular payments or installments comprising of both the principal and interest amount. It generally involves the process where in the value of a loan or an intangible asset is written down over its maturity period.