Suppose you just bought a 10-year annuity of $16,500 per year at the current interest rate of 13.75 percent per year.

Requirement 1:

What is the value of the investment at the current interest rate of 13.75 percent?

Value of investment

$

Requirement 2:

What happens to the value of your investment if interest rates suddenly drop to 8.75 percent?

Value of investment

$

Requirement 3:

What happens to the value of your investment if interest rates suddenly rise to 18.75 percent?

Value of investment

$