You have decided to buy an annuity from a life insurance company that provides an annual payment of $25,000 per year at the end of each of the next 35 years. How much are you going to have to pay for this annuity contract if the insurance company promises an 9% annual rate of return?

You have decided to buy an annuity from a life insurance company that provides an annual payment of $25,000 per year at the end of each of the next 35 years. How much are you going to have to pay for this annuity contract if the insurance company promises an 9% annual rate of return?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 4P

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Question

You have decided to buy an annuity from a life insurance company that provides an annual
payment of $25,000 per year at the end of each of the next 35 years. How much are you going to
have to pay for this annuity contract if the insurance company promises an 9% annual rate of
return?

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