Respuesta :
The current dollar value of the contribution made in the form of annuity is $517,063.08
Amount of annuity (a)= $5,000,000
No of years (n) = 15
Rate of interest (r) = 0.06
Present value = a *[1-(1/1+r) ^n]/r
= $517,063.08
An annuity is a type of insurance contract that is approved and dispersed by banking institutions with the purpose of paying out initial investment funds at a later date in the form of a predictable cash flow. Annuities are procured or decided to invest in by investors who a regular income in future. Investors earn the return at a particular rate of interest.
Annuities which are receive d at the beginning of the period are called annuity due whereas those annuities which are received at the end of the period are called ordinary annuity.
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