Your Grandmother Wishes to Have a Steady Source of Income

Multiple Choice

Your grandmother wishes to have a steady source of income for the first ten years of her retirement. She can buy an annuity which will pay her $6,000 per year at the end of each year for ten years. She will receive her first payment one year from today. Similar risk investments are yielding 7%. What should she pay for the investment?

A) $30,501
B) $42,141
C) $45,091
D) $60,000