Respuesta :
Answer:
Present value Due = $9,364.92
Explanation:
Given:
Number of payment (n) = 20
Periodic payment (PMT) = $1,000
Rate of interest (i) = 10% = 10/100 = 0.1
Present value of annuity = ?
Computation of Present value of annuity:
[tex]Present Value = PMT [\frac{1-(1+i)^{-n}}{i}] (1+i)\\[/tex]
[tex]Present Value = 1,000 [\frac{1-(1+0.1)^{-20}}{0.1}] (1+0.1)\\\\Present Value = 1,000 [\frac{1-(1.1)^{-20}}{0.1}] (1.1)\\\\Present Value = 1,000 [\frac{1-0.148643628}{0.1}] (1.1)\\\\Present Value = 1,000 [\frac{0.851356372}{0.1}] (1.1)\\\\Present Value = 1,000 [\frac{0.851356372}{0.1}] (1.1)\\\\Present Value = 9,364.92[/tex]
Present value Due = $9,364.92
The amount that should be invested today is $9,364.92.
Given that,
- Charlie Stone wants to retire in 30 years, and he wants to have an annuity of $1,000 a year for 20 years after retirement.
Based on the above information, the calculation is as follows:
[tex]= 1000\times ((1-(1+ 10\%)^-20)\div (10\%))\times (1+10\%)[/tex]
= $9,364.92
Learn more: brainly.com/question/17429689
