Problem:
Atlas Insurance wants to sell you an annuity which will pay you $1,600 per quarter for 25 year. You want to earn a minimum rate of return of 6.5 percent.
Required:
Question 1: What is the most you are willing to pay as a lump sum today to buy this annuity? Describe in detail and provide all workings and methods.
a. 72,008.24
b. 74,208.16
c. 78,818.41
d. 83,008.80
e. 88,927.59