Terms of a 20-year annuity-certain: All payments are made on 1/1 Initial payment = $300 Each of the next 9 payments is $300 more than the preceding payment Each of the subsequent 10 payments is $200 less than the preceding payment Interest rate: 7% per year, compounded annually for the first 10 years 6% per year, compounded annually thereafter X = the present value of the annuity immediately before the first payment is made. In what range is X?
A)Less than $18,600
B)$18,600 but less than $18,800
C)$18,800 but less than $19,000
D)$19,000 but less than $19,200
E)$19,200 or more

Question

Quizplus · Accepted Answer

The present value of the annuity is calculated by considering the increasing payments for the first 10 years and decreasing payments for the next 10 years, discounted at the given interest rates. The calculations show that the present value falls within the range of $19,000 but less than $19,200.

Terms of a 20-Year Annuity-Certain: All Payments Are Made on 1/1