Crana Company i considering investing in an ainultv contract

Crana Company i, considering investing in an ainultv contract that will raturn s78.620 annuallV at th? end ateach yAArrar 1B vears. (ur oculotio purposesy use 5 ueciof pluces ds displuyed e fator (able provided) What amount should Crane Company pay for this investment if i earns an 75s return? (Round answer to 2 decimal places, e.g. 25.25. Crane Company should pay

Solution

Crane Company should pay the PV of the annuity. PV of the annuity = 28620*PVIFA(7,18) = 28620*10.05909 = $      2,87,891.16