How much would you have to invest today in the bank at an interest rate of 8% to have an annuity of $4,800 per year for 7 years, with nothing left in the bank at the end of the 7 years? Select the amount below that is closest to your answer. (Ignore income taxes.)Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. (Round your intermediate calculations to 3 decimal places.)Garrison 16e Rechecks 2017-12-15

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Quizplus · Accepted Answer

Using the present value annuity factor from Exhibit 14B-1 for 7 years and an interest rate of 8%, we can find that the factor is 4.868. To calculate the present value of the annuity, we divide the annual payment of $4,800 by the factor of 4.868, which gives us $986.28. Therefore, the amount needed to invest today would be $986.28 x 25, which equals $24,657. Since we want to have nothing left in the bank at the end of the 7 years, we don't need to consider any future value. The closest amount to our answer is $24,989, which is choice C.

How Much Would You Have to Invest Today in the Bank