You Are Comparing Two Annuities with Equal Present Values

question 78

Multiple Choice

You are comparing two annuities with equal present values.The applicable discount rate is 6.5 percent.One annuity will pay $2,000 annually,starting today,for 20 years.The second annuity will pay annually,starting one year from today,for 20 years.What is the annual payment for the second annuity?

• A)$2,225
• B)$2,075
• C)$2,000
• D)$2,130
• E)$2,405

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A baby who is being raised in an environment where English is the primary language of communication.

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