Final answer:
The Present Value (PV) of an annuity due with 5 payments of $2,500 at an interest rate of 5.5% is approximately $11,060.27.
Step-by-step explanation:
The Present Value (PV) of an annuity due can be calculated using the formula:
PV = PMT x [(1 - (1 + r)^(-n)) / r],
where PV is the present value, PMT is the payment amount, r is the interest rate per period, and n is the number of payment periods.
In this case, the PMT is $2,500, the interest rate is 5.5% or 0.055, and the number of payments is 5.
Plugging in these values, the calculation is:
PV = $2,500 x [(1 - (1 + 0.055)^(-5)) / 0.055].
Solving the equation gives a PV of approximately $11,060.27.