madisonnicole3
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Frye Company is considering investing in an annuity contract that will return $50,000 annually at the end of each year for 20 years. What amount should Frye Company pay for this investment if it earns an 8% return?

Respuesta :

taskmasters
We solve the problem but first, let us identify the given values.
Year contract =20 years
Returned annually $50,000 and earns an 8% returned.

Solving for companies investment is shown below:
Company investment = $50,000 * 9.81815 (for 20 years and 8% interest)
Company investment = $490, 907.5

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