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Present value.County Ranch Insurance Company wants to offer a guaranteed annuity in units of $700, payable at the end of each year for 15 years.

Present value.County Ranch Insurance Company wants to offer a guaranteed annuity in units of $700, payable at the end of each year for 15 years. The company has a strong investment record and can consistently earn 9% on its investments after taxes. If the company wants to make 1% on this contract, what price should it set on it? Use 8% as the discount rate. Assume it is an ordinary annuity and the price is the same thing as present value.

What price should the company set on the annuity contract?

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