Answered: A company invests $45,000 per year for…

A company invests $45,000 per year for five years at 12% annual interest. Compute the value of this annuity investment at the end of five years.

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications

Section: Chapter Questions

Problem 14E

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Question

A company invests $45,000 per year for five years at 12% annual interest. Compute the value of this annuity
investment at the end of five years.

Expert Solution

Step 1

Annuity:

In this type of contract, a purchaser is required to pay a fixed amount within the prescribed time. In this, the agreement’s issuer is an insurance company and the person who purchases an annuity is known by the term of the annuitant.

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