An insurance company is supposed to pay the medical costs for a claimant. The average annual claims costs today are $$1,000$ and the medical inflation is expected to be $4\%$ per year.

You are given that the claimant is expected to live an additional twelve years, the claim payments are to be made at yearly intervals, and the first claim payment is to be made one year from today.

Which of the following answer choices is closest to the present value of the obligation if the annual interest rate is $3\%.$

Possible Answers

$12,293$

$12,662$

$12,785$

$13,168$

$13,495$