Question

I need to know amount needed now to invest to receive annuity of 15000

amount of annuity expected %15000

payment quarterly

4 years

8 %

Present value needed now to receive annuity

Answer 1

P = $203,666

Explanation:

given,

rate = 8 % for quarterly rate = 8/4 = 2 %

time = 4 years = 4 × 4 = 16 quarters

annuity needed after 4 years = $ 15000

Present value (P)=
`A [(1-(1+r)^(-n))/(r)]`

P =
`15000 [(1-(1+0.02)^(-16))/(0.02)]`

P = $203,665.63

hence, the present value require to get Annuity of 15000 P = $203,666