Value of a retirement annuity Personal Finance Problem An insurance agent is trying to sell you an annuity, that will provide you with $6 comma 200 at the end of each year for the next 20 years. If you don't purchase this annuity, you can invest your money and earn a return of 4%. What is the most you would pay for this annuity right now? Ignoring taxes, the most you would pay for this annuity is

The maximum to be paid= $84,260.023

Explanation:

The maximum amount to be paid is the present value of the series of annual cash inflow discounted at the opportunity cost rate of 4% per annum.

This is given in the relationship below:

PV = A ×( 1- (1+r)^(-n))/r )

A- annual amount receivable- 6,200. r-rate of return - 4%, n-number of years- 20

PV = 6,200 × ( 1 - (1+0.04)^(-20)/0.04)

= 6,200 × 13.5903

= $84,260.023

The maximum to be paid= $84,260.023

Length of the report

Explanation:

A report is a document for communicating end result of an activity as demanded. However a good report must not only be rich in content but also be brief so as to make it readers friendly.

A consideration for the length of the report will have limited the extent of the jargon present in the report.