You are offered an investment that will pay you 1800 CAD to

You are offered an investment that will pay you $1800 CAD [to be entered into cell B1] per year for 20 years [to be entered into cell B2]. You can earn a rate of 6.92% per year [to be entered into cell B3] on similar investments.

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(a)

How much should you be willing to pay for this annuity [cell B5]? Use the PV function.

(b)

What is the correct formula (using 14 characters or less) that should be placed in cell B5?

a)PResent value of annuity =PVA 6.92%,,20* Amount

= 10.66021*1800

= $ 19188.37

b)Formula placed in B5 : -PV(B3,B2,B1)

You are offered an investment that will pay you $1800 CAD [to be entered into cell B1] per year for 20 years [to be entered into cell B2]. You can earn a rate

You are offered an investment that will pay you 1800 CAD to

Solution

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