On December 30, 2017, Madeline is approached by an investment advisor offering a
ID: 2826023 • Letter: O
Question
On December 30, 2017, Madeline is approached by an investment advisor offering an annuity that would pay her $2,000 a month starting on January 1, 2018 and on the first day of each month thereafter with the last payment on December 1, 2018. Similar annuities are currently paying 6.50%. What is the most Madeline should pay on December 30, 2017 for this annuity (Hint: Set your financial calculator to Begin mode and P/YR to 12)? Don’t forget to set your calculator to End mode when you’re done!
a.
$24,000.00
b.
$23,274.36
c.
$23,301.47
d.
$23,651.21
e.
$23,112.84
Explanation / Answer
FV = 0, N = 12, PMT = 2000, rate = 6.50%/12
use PV function in Excel with type as 1
most that she should pay = 23,301.47
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