Baxter Desires to Purchase an Annuity on January 1, 2019

question 91

Multiple Choice

Baxter desires to purchase an annuity on January 1, 2019, that yields him five annual cash flows of $19,000 each, with the first cash flow to be received on January 1, 2022. The interest rate is 10% compounded annually. The cost (present value) of the annuity on January 1, 2019, is ________. (Use spreadsheet software or a financial calculator to calculate your answer. Round intermediary calculations two decimal places and round your final answer to the nearest dollar.)

• A) $49,194
• B) $95,000
• C) $59,525
• D) $79,227

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Definitions:

Overeating

Consumption of more food than the body needs for energy, often leading to weight gain and potentially obesity.

Ovarian Cancer

A type of cancer that begins in the ovaries, which are the female reproductive glands that produce eggs (ova) as well as the hormones estrogen and progesterone.

Infertility

The inability to conceive a child after a year or more of regular sexual intercourse without the use of birth control.

Pregnant

The state of carrying a developing fetus within the uterus.