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Find equivalent value of annuity if paid in one lump sum

You own an ordinary annuity contract that will pay you $3,000 per year for 12 years. You need money to pay back a loan in 6 years, and you are afraid if you get the annuity payments annually you will spend the money and not be able to pay back your loan. You decide to sell your annuity for a lump sum of cash to be paid to you five years from today. If the interest rate is 8%, what is the equivalent value of your 12-year annuity if paid in one lump sum five years from today?

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Solution Preview :

Prepared by a verified Expert

Finance Basics: Find equivalent value of annuity if paid in one lump sum

Reference No:- TGS0681103

Have a Question? (oR Write a Review)

Recent Questions Asked Finance Basics

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Solution Preview :

Prepared by a verified Expert

Finance Basics: Find equivalent value of annuity if paid in one lump sum

Reference No:- TGS0681103

Recent Questions Asked Finance Basics

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Q : Prepare the company manufacturing overhead budget

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