Answer:
$1,565.48
Explanation:
This is an annuity due type of question since the recurring payments are made at the beginning of each year unlike Ordinary annuity whose payments occur at the end of each period.
With a financial calculator on beginning mode "BGN", use the following inputs to find the PV;
Total duration of investment; N = 3
Recurring payment; PMT = 550
Interest rate; I/Y = 5.5%
One time cashflows; FV = 0
then compute for Present value ; CPT PV = 1,565.476
Therefore, the most you should pay is $1,565.48
