1. You just inherited some money, and a broker offers to sell you an annuity that pays $4,300 at the end of each year for 20 years. You could earn 5% on your money in other investments with equal risk. What is the most you should pay for the annuity?
a. $61,625.63
b. $53,051.63
c. $60,018.01
d. $52,515.75
e. $53,587.50
2. What is the PV of an ordinary annuity with 5 payments of $6,200 if the appropriate interest rate is 4.5%?
a. $22,863.00
b. $27,217.86
c. $30,211.82
d. $21,502.11
e. $30,484.00