An investor purchases an annuity that will pay a constant payment starting today of $100....
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An investor purchases an annuity that will pay a constant payment starting today of $100. Beginning with the payment 12 years from today each payment will be 5% greater than the previous payment. The last payment will be received 25 years from today.
The annuity is bought to yield an effective interest rate of i such that (vi)^4 = 0.85. What is the purchase price of the annuity today?
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