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Provide a real-life example of annuity

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Reference no: EM133120210

(1) Provide a real-life example of annuity.

(2) Suppose you have won a special scholarship due to your excellent academic performance from a global company, and it pays you once a year at the end of every year. Today, December 31st 2021, you just received your first scholarship of $60,000 and you plan to spend all of it. However, after taking COMM 203, you decided to start saving beginning next year. Your plan is as follows:

  • One year from today, you will deposit 5 percent of your annual scholarship in an account that will earn 8 percent per year, annual compounding.
  • Your scholarship will increase at 3 percent per year for another 40 years. How much money will you have on the date of December 31st, 40 years from today?

Reference no: EM133120210

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