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suppose that you are thinking to buy an annuity that pays $1000 every month from the end of October 2020 to the end of september
suppose that you are thinking to buy an annuity that pays $1000 every month from the end of October 2020 to the end of september 2025. the quoted annual rate is4%.
(a) how much are you willing to pay for it on october 1, 2020
(b) how much will you be willing to pay a year later
(c) from the perspective of october 1, 2020, what is the future value of all payments at the end of september 2025? at the end of March 2026?
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