Question
Bob is thinking of buying an annuity that pays out $100 per year forever beginning five years from today.If the appropriate discount rate is 8%:
Bob is thinking of buying an annuity that pays out $100 per year forever beginning five years from today. If the appropriate discount rate is 8%:
a. What is the value of this annuity today?
b. What is the value of this annuity immediately before it pays out the first cash flow (five years from today)?
Step by Step Solution
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Step: 1
The value of an annuity is the present value of all the future cash flows In this case the annuity p...
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Advanced Accounting
Authors: Gail Fayerman
1st Canadian Edition
9781118774113, 1118774116, 111803791X, 978-1118037911
