finance
You have won a contest that will pay you $10,000 a year at the end of each of the next 5 years. Based on a discount rate of 8% per year, what is the annuity worth to you today
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The annuity is worth $41,607.41 to you today. This figure is calculated by taking the present value of the future payments over the next 5 years. This involves multiplying each of the future payments by the present value factor of 1/(1+i)^n, where 'i' is the discount rate (8%) and 'n' is the number of years remaining (5). This figure is then added together to give the present value of the annuity.
