Find the present value of the ordinary annuity: Payments of $450 made annually for 13 years at 6% compounded annually. a. $ 4182.75 b. $ 3772.71 c. $ 3982.28 d. $ 3983.71
Question:
Find the present value of the ordinary annuity: Payments of $450 made annually for 13 years at 6% compounded annually.
a. $ 4182.75
b. $ 3772.71
c. $ 3982.28
d. $ 3983.71
Answers (1)
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Phyllis April 6, 2023 в 18:32The correct answer is (c) $3982.28. To find the present value of an ordinary annuity, use the formula: PV = PMT x (1 - (1 + r)^-n) / r where PV is the present value, PMT is the annual payment, r is the interest rate, and n is the number of years. In this case, PMT = $450, r = 6%, and n = 13. Plugging these values into the formula, we get: PV = $450 x (1 - (1 + 0.06)^-13) / 0.06 PV = $450 x (1 - 0.37689) / 0.06 PV = $3982.28 Therefore, the present value of the ordinary annuity is $3982.28.
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