The relationship between the value of an annuity and the

Reference no: EM13617251

The relationship between the value of an annuity and the level of interest rates is as follows: The present value of an annuity as r rises; the future value of an annuity as r rises. Suppose you just bought a 7-year annuity of $8,000 per year at the current interest rate of 9 percent per year. The present value of this investment is $. If interest rates suddenly rise to 14 percent, the present value of your investment to $. If, instead, interest rates suddenly drop to 4 percent, the present value of your investment to $

Reference no: EM13617251

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