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Person A can purchase one of two annuities: Annuity 1: A 8-year decreasing annuity-immediate, with annual payments of 8, 7, 6, ..., 1. Annuity 2:
Person A can purchase one of two annuities:
- Annuity 1: A 8-year decreasing annuity-immediate, with annual payments of 8, 7, 6, ..., 1.
- Annuity 2: A perpetuity-immediate, with annual payments. The perpetuity pays 1 in a year 1, 2 in year 2, 3 in year 3, ..., and 9 in year 9. After year 9, the payments remain constant at 9.
At an annual effective interest rate of i, the present value of Annuity 2 is twice the present value of Annuity 1. Calculate the value of Annuity 1 to the nearest whole dollar.
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