Your uncle has said that if you agree to finish college he will give you equal payments of $2,000 at the end of each year for the next ten years. if the annual interest rate stays constant at 7%, what is the value of these payments in today’s dollars? round your answer to the nearest whole dollar.

the value of the payments today is 14,047

Explanation:

this problem can be solved applying the concept of annuity, keep in mind that an annuity is a formula which allows you to calculate the present value of future payments affected by an interest rate. by definition the present value of an annuity is given by:

where is the present value of the annuity, is the interest rate for every period payment, n is the number of payments, and P is the regular amount paid. so applying to this particular problem, we have:

you can put this in your 11 sentence summary

" most of the money would be invested in innovation, economic convergence."