An annuity will make a payment every two months, starting two months from now. If the yield rate is 5.4 percent effective and the annuity will make 34 payments of 1370 dollars each, what is the price of the annuity?

An annuity will make a payment every two months, starting two months from now. If the yield rate is 5.4 percent effective and the annuity will make 34 payments of 1370 dollars each, what is the price of the annuity?

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section4.17: Amortized Loans

Problem 1ST

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Concept explainers

Types of Insurance Contract

Insurance is a contract wherein an individual or entity gets financial protection from the insurance company for any damages or losses incurred. The individual or entity is called the insured, whereas the insurance company is called the insurer. The insured and the insurer enter a legal contract for a fixed term called the insurance term, and the contract is called an insurance policy.

Question

An annuity will make a payment every
two months, starting two months from
now. If the yield rate is 5.4
percent
effective and the annuity will make 34
payments of 1370 dollars each, what is
the price of the annuity?
Answer = 54697.996
%3D
dollars.

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