How do i calculate this problem?
Your father is about to retire, and he wants to buy an annuity that will provide him with $50,000 of income a year for 20 years, with the first payment coming immediately. The going rate on such annuities is 6%. How much would it cost him to buy the annuity today?
Public Comments
- use a financial calc. Set to BEGIN mode, since the pmts start immediately: n=20 i=6 pmt=50000 fv=0 pv= ? what we need to spend to buy the annuity solve for pv=$607,905.82
