A Deferred Annuity Will Pay You $500 at the End

question 149

Multiple Choice

A deferred annuity will pay you $500 at the end of each year for 10 years,however the first payment will not be made until three years from today (payments will be made at the end of years 3 through 12) .What amount will you have to deposit today to fund this deferred annuity? Use an 8% discount rate and round your answer to the nearest $100.

• A) $2,200
• B) $2,400
• C) $2,900
• D) $3,400

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