A 10-year annuity pays $2,500 per month, and payments are made at the end of eac
ID: 2778900 • Letter: A
Question
A 10-year annuity pays $2,500 per month, and payments are made at the end of each month. The interest rate is 9 percent compounded monthly for the first four years, and 7 percent compounded monthly thereafter.
What is the present value of the annuity? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
A 10-year annuity pays $2,500 per month, and payments are made at the end of each month. The interest rate is 9 percent compounded monthly for the first four years, and 7 percent compounded monthly thereafter.
Explanation / Answer
Payment $2,500 Months 48 Annual rate 9% Payment $2,500 Months 84 Annual rate 7% Present Value $62,926.72
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