An annuity is paid at a rate of $250 per month. Assume that investments can earn interest at 4% per year compounded continuously throughout the life of the annuity payments. What is the present value of this annuity if it is paid out over 10 years? What is the present value of this annuity if it is paid out in perpetuity? In each case, what does the present value of the annuity represent?
An annuity is paid at a rate of $250 per month. Assume that investments can earn interest at 4% per year compounded continuously throughout the life of the annuity payments. What is the present value of this annuity if it is paid out over 10 years? What is the present value of this annuity if it is paid out in perpetuity? In each case, what does the present value of the annuity represent?
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
Problem 1RQ
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An annuity is paid at a rate of $250 per month. Assume that investments can earn interest at 4% per year compounded continuously throughout the life of the annuity payments. What is the present value of this annuity if it is paid out over 10 years? What is the present value of this annuity if it is paid out in perpetuity? In each case, what does the present value of the annuity represent?
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