Someone needs to buy an annuity package that will provide a future income to an individual over a 42-year period at the following levels: £3452 paid at the beginning of each year for the first 10 years followed by £3384 paid at the beginning of each year up until year 42 (inclusive). Calculate, the price of this investment in order to assure the required payments, given that the rate of interest during this period is: 4.4% pa effective for the first 20 years and then 8.7% pa effective thereafter correct answer = 61939.72, NO TABLES, ONLY FORMULAS, PLEASE

Someone needs to buy an annuity package that will provide a future income to an individual over a 42-year period at the following levels: £3452 paid at the beginning of each year for the first 10 years followed by £3384 paid at the beginning of each year up until year 42 (inclusive). Calculate, the price of this investment in order to assure the required payments, given that the rate of interest during this period is: 4.4% pa effective for the first 20 years and then 8.7% pa effective thereafter correct answer = 61939.72, NO TABLES, ONLY FORMULAS, PLEASE

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 16P

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