Math Problem Statement

Suppose an annuity will pay $16,000 at the beginning of each year for the next 8 years. How much money is needed to start this annuity if it earns 6.3%, compounded annually? (Round your answer to the nearest cent.)

Solution

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Math Problem Analysis

Mathematical Concepts

Annuities
Present Value
Interest Rate
Compounding

Formulas

Present value of an annuity due: PV = P * [(1 - (1 + r)^-n) / r] * (1 + r)

Theorems

Annuity Due Theorem

Suitable Grade Level

College Level / Advanced High School (Grades 11-12)