Calculate Expected Annual Amount From 40 Year Investment

Question

You are considering an investment in a 40-year security. The security will pay $25 a year at the end of each of the first 3 years. The security will then pay $30 a year at the end of each of the next 20 years. The nominal interest rate is assumed to be 8%, and the current price (present value) of the security is $360.39. Given this information, what is the equal annual payment to be received from Year 24 through Year 40 (for example, for 17 years)?

 

Summary

The question belongs to Finance and it discusses about calculating the equal annual payment to be received from an investment in 40 year security.

Total Word Count 140

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