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Q3. Suppose a financial advisor tells that there are annuities which will pay an annual amount of $20,000 in arrears for 20 years. To purchase
Q3. Suppose a financial advisor tells that there are annuities which will pay an annual amount of $20,000 in arrears for 20 years. To purchase the annuity, you must provide the financial institution with a lump sum payment of $260,000 today. Determine what the price of annuity would have to be make this a good deal if the interest rate was 5%. (6 marks)
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