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How much does the second annuity pay each year

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Problem 1: Clint just won a prize that will pay him $30,000 a year for 30 years, starting at the end of Year 10. What is the current value of this prize if the discount rate is 12 percent, compounded annually?

A. $241,655.52

B. $240,550.64

C. $87,143.40

D. $86,191.91

E. $77,806.61

Problem 2: You are comparing two annuities with equal present values. The applicable discount rate is 7.25 percent, compounded annually. One annuity pays $6,500 on the first day of each year for 20 years. How much does the second annuity pay each year for 20 years if it pays at the end of each year?

A. $5,581.40

B. $6,060.61

C. $6,028.75

D. $6,971.25

E. $7,086.50

Reference no: EM132958134

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