Have a Chance to Buy an Annuity That Pays $2,500

question 63

Multiple Choice

have a chance to buy an annuity that pays $2,500 at the end of each year for 3 years.You could earn 5.5% on your money in other investments with equal risk.What is the most you should pay for the annuity?

• A)$5,493.71
• B)$5,782.85
• C)$6,087.21
• D)$6,407.59
• E)$6,744.83

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Definitions:

Dividing

Dividing is the act of separating or partitioning an object, number, or amount into smaller parts or sections.

Dizygotic Twins

Also known as fraternal twins, these are siblings born from two separate eggs fertilized by two different sperm, resulting in genetically distinct individuals born at the same time.

Fraternal Twins

Twins that develop from two separate eggs fertilized by two different sperm, resulting in siblings that are genetically unique from each other.

Correlation

A statistical measure that describes the extent to which two variables change together, but not necessarily indicating that one causes the other.