Answer:
Answer: e. 9535,17
The annuity pays $3350 at the beginning of each year during 3 years, which means that if you decide to invest on it, you could receive $3350 now (at moment 0), $3350 at the beginning of the next year (let’s say at the beginning of moment 1) and $3350 in two years (at the beginning of period 2).
To be able to know how much does those payments (that are going to happened in the future) worth today, one should discount futures values to moment zero. One could easily think of these payments as if they were three bank checks that worth $3350 each, to be paid in the dates mentioned before: at moment zero (now), in a year (moment 1) and in two years (moment 2). If one decided to go to a bank and ask the bank to have money in advanced using these three checks, the bank would gives us the equivalent of the checks' present value, which is
[tex]Present Value= 3350 + \frac{3350}{1+0.055} +\frac{3350}{(1+0.055)^2}[/tex]
Step-by-step explanation:
