Your grandfather who is about to retire wants to sell some of his stock and buy an annuity that will provide him with income of 50,000 per year for 30 years, beginning a year from today. The going rate on such annuities is 7.25%. How much would it cost him to buy such an annuity today?

a. 574,924

b. 605,183

c. 635,442

d. 667,214

e. 700,575

This must include the following:

Cashflow time

Formula

Complete solution with explanation

Interpret the answer.