Question

Payment 4500.00

Anually

10 years

3% interest

Annuity due

Answer 1

The annuity due is $527.54.

Explanation:

Given : Payment $4500 anually 10 years at 3% interest.

To find : Annuity due ?

Solution :

The formula of annuity is

`A=(r* P)/(1-(1+r)^(-n))`

Where, A is the Annuity due

P is the Payment P=$4500

r is the interest rate r=3%=0.03

n is the time n=10 years

Substitute the value in the formula,

`A=(0.03* 4500)/(1-(1+0.03)^(-10))`

`A=(135)/(1-(1.03)^(-10))`

`A=(135)/(1-0.74409)`

`A=(135)/(0.2559)`

`A=527.54`

Therefore, The annuity due is $527.54.