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An author just signed a lucrative contract with a publisher that offers to pay her the amount of $ 800 at the end of year
An author just signed a lucrative contract with a publisher that offers to pay her the amount of $800 at the end of year 9 when the book is scheduled to be released. The author, being profligate, desires to receive a different package: an immediate payment of $100 that is followed by an annuity (an equal amount) to be paid at the end of each year for 9 consecutive years. What annuity will make his package equivalent to the publisher's advance. Use an interest rate is 6%.
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