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5. Aunt Zelda's son starts college in 5 years for which she will need $25,000 payable at the end of each of the 4 years.

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5. Aunt Zelda's son starts college in 5 years for which she will need $25,000 payable at the end of each of the 4 years. Suppose she can buy an annuity in 5 yrs. that will enable her to make the four $25,000 annual payments. Draw a timeline for all cash flows. What will be the cost of the annuity 5 years from today? What is the most she should be willing to pay for it if purchased today? Assume a discount rate of 8% during these 9 years

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