Hi, I am looking for explanation for this question:
An amount of $65,000 is invested today, providing an annuity income for the next ten years, starting in 1 year.
If the interest rate is 7%, what, to the nearest $10, will be the annual cash value of the annuity income? (From the annuity table, the rate is 7.024%)
The answer is $9,250.
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Annual Cash Value of Annuity Income
4y ago#1If you had a mortgage of 65,000 and were paying 7% interest and repaying the loan, the equal annual amount you pay is:
65,000 ÷ cumumalive 10 year 7% factor =65,000 ÷ 7.024 = 9250.
Just turn it round and e tgemortgage provider receiving that amount each year.
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