Math Problem Statement

We Pay Insurance Company will pay you $1,125 each quarter for 25 years. You want to earn a minimum interest rate of .86 percent per quarter. What is the most you are willing to pay today for these payments?

Multiple Choice

$72,746.05

$177,185.86

$75,254.54

$71,491.81

$74,776.72

Solution

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Math Problem Analysis

Mathematical Concepts

Annuities
Present Value
Interest Rates

Formulas

Present value of an annuity formula: PV = P × (1 - (1 + r)^-n) / r

Theorems

Time Value of Money

Suitable Grade Level

Grades 11-12, College Level