Question

Amount of payment $12000.00 Payment payable semiannually 8Years Interest 7% Value of annuity

Answer 1

$992.227

Explanation:

We have given amount of payment =$12000

Total time =8 years, as payment is payable semiannually so total period = 8×2=16 period

Rate of interest =7% annually so 3.5% semiannually

Present value annuity factor for 16 period at rate of 3.5%

`=\sum (1)/((1+3.5)^1)+(1)/((1+3.5)^2)+(1)/((1+3.5)^3)+----------------(1)/((1+3.5)^(16))=12.094`

So annuity
`=(total\ payment)/(present\ value\ annuity\ factor)=($12000)/(12.094)=$992.227`