an annuity is an arrangement where a sum invested is paid out (including interest) over a number of years. How much must I invest now at 5.48% p.a. in order to be paid $2000 at the end of each year from year 1 to year 13? (no funds remain after the year 13 payment.
total paid = 2000 x 13 = 26000
r = 0.0548
Sn = a (r^n - 1) / (r-1) 26000 = a (1.0548^13 - 1)/(1.0548 - 1) a = 1423.61
Invest = 13 x a = 13 x 1423.61 = 18506.92
BUT answer = 18255.80 ???