You are contemplating the purchase of a twenty-year variable annuity that promises cash flows in the following pattern, repeating every four years:
0
1 $1,000
2 $1,200
3 $1,400
4 $1,600
....
17 $1,000
18 $1,200
19 $1,400
20 $1,600
What would you pay today (time zero) to acquire this annuity if your required rate of return was 8%, compounded quarterly?