Morgan Jennings, a geography professor, invests S93.000 in a parcel of land that

Question

Morgan Jennings, a geography professor, invests S93.000 in a parcel of land that is expected to increase In value by 12 percent per year for the next six years He will take the proceeds and provide himself with a 16-year annuity Assuming a 12 percent interest rate, how much will this annuity be? Use Appendix A and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator metheds (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Explanation / Answer

FV = PV * FVIF (12%, 6 periods)

FV = $93,000 * 1.9738 = $183,563

A = PVA/PVIFA (12%, 16 periods)

A= $183,563 / 6.974 = $26,321

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