Your investment advisor wants you to purchase an annuity that will pay you $25,000 per year for 10 years. If you require a 7% return, what is the most you should pay for this investment

The most you should pay for the investment is $175589.54

Explanation:

Given C = $25 000, n = 10 years, r = 7%, PV = ?

As we looking for the amount you should pay now to have 25 000 paid to your account for 10 years

PV = C * { 1 - (1+r) ^-n/r}

= 25000*{1 - (1+0.07) ^-10/0.07}

=$175589.54