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QUESTION
An annuity is expected to pay dividends of $25.75 each year, forever. If the discount rate is 8%, compounded quarterly and the annuity is currently...
2. An annuity is expected to pay dividends of $25.75 each year, forever. If the discount rate is 8%, compounded quarterly and the annuity is currently selling for $305.78, are you interested in buying this annuity?
- No, this annuity costs more than it is worth.
- Yes, the cash flow is guaranteed.
- Yes, this annuity costs less than it is worth.
- No, this annuity costs less than it is worth.
- Yes, this annuity costs more than it is worth.
