If you put up $46,000 today in exchange for a 6.75 percent 15-year annuity,what will the annual cash flow be?

Question

Quizplus · Accepted Answer

The annual cash flow of an annuity can be calculated using the formula for the present value of an annuity: PV = C * [(1 - (1 + r)^-n) / r]. Solving for C (the annual cash flow), we get C = PV / [(1 - (1 + r)^-n) / r]. Plugging in the values: PV = $46,000, r = 6.75% or 0.0675, and n = 15, we find that C is approximately $4,971.10.

If You Put Up $46,000 Today in Exchange for a 6.75