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American General offers a 8 -year annuity with a guaranteed rate of 6.73% compounded annually. How...

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Basic Math

American General offers a 8 -year annuity with a guaranteed rateof 6.73% compounded annually. How much should you pay for one ofthese annuities if you want to receive payments of $600 annuallyover the 8 year period?

Answer & Explanation Solved by verified expert
3.8 Ratings (357 Votes)

A = P(1 + r)t

or, 600 = P(1 + 0.0673)8

or, 600 = P(1.0673)8

or, P = 600/(1.0673)8

or, P = 356.34

                                                                     

                                                    

                                 

                                       

                                 
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