Frye Company is considering investing in an annuity contract that will return $50,000 annually at the end of each year for 20 years. What amount should Frye Company pay for this investment if it earns an 8% return?
We solve the problem but first, let us identify the given values. Year contract =20 years Returned annually $50,000 and earns an 8% returned.
Solving for companies investment is shown below: Company investment = $50,000 * 9.81815 (for 20 years and 8% interest) Company investment = $490, 907.5
