How much would you be willing to pay (rounded to the nearest dollar)for a 20-year ordinary annuity if the payments are $4,500 per year and you want to earn a rate of return equal to 5.5% per year?
A) $84,500
B) $63,445
C) $56,734
D) $53,777

Question

Quizplus · Accepted Answer

The present value of an ordinary annuity can be calculated using the formula: PV = Pmt * [(1 - (1 + r)^-n) / r]. Plugging in the values: Pmt = $4,500, r = 0.055, n = 20, the calculation gives approximately $53,777.

How Much Would You Be Willing to Pay (Rounded to the Nearest