Question

DID I DO THIS RIGHT [WORK IS SHOWN]

Juan has an annuity that pays him $9400 at the beginning of each year. Assume the economy will grow at a rate of 3.4% annually. What is the value of the annuity if he received it now instead of over a period of 10 years?

$113,498.88

$109,766.81<--- MY CHOICE

$81,243.05

$78,571.61
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what I plugged in FV = 9400((1+0.034/1)^(1*10) - 1 )/( 0.034/1 )

CLICK THE LINK 2 SEE MY ANSWER
http://www.wolframalpha.com/input/?i=FV+%3D+9400%28%281%2B0.034%2F1%29%5E%281*10%29+-+1+%29%2F%28+0.034%2F1+%29

Answer 1

Hi again. Let me take a look.

Answer 2

The formula is right this time! Yippee! Just know that it can be simpler:\[FV = 9400(1 + 0.034)^{10}\]I know, math is insane, but once you get a lot of practice it'll start clicking on a deeper level than just memorizing formulas. Try looking up the derivation of the formulas (how they're actually made) and it'll make much more sense - and it'll be easier to remember them, too!

Answer 3

And by the way, if your answer matches a given one SPOT ON that's a clue that either you've made a VERY common mistake or you're right. If you don't match any of them, like the last one, you know you've messed up.

Answer 4

pays at the beginning of each year (as opposed to the end of the year) means an "Annuity Due" (as opposed to "Ordinary Annuity")

What is the value of the annuity if he received it now

means what is the Present Value (what is it worth right now)
See http://www.investopedia.com/articles/03/101503.asp
for some formulas

It looks like you want to use
\[ PV = P \left( \frac{1 - (1+i)^{-n}}{i}\right)(1+i) \]

which should match this calculator
http://www.investopedia.com/calculator/pvannuitydue.aspx