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Amjad wishes to purchase an annuity contract that will pay him 7000 a year for the rest of his life. The state life insurance figures

Amjad wishes to purchase an annuity contract that will pay him 7000 a year for the rest of his life. The state life insurance figures that his life expectancy is 20 years. The company imputes a compound annual interest rate of 6% in its annuity contract.

a. How much Amjad will have to pay for the annuity

b. How much would he have to pay if the interest rate were 8%.

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