Question

Find the present value on February 1 of an annuity that pays $2500 every three months for 7 years. The first payment is due on the coming April 1 and the rate of interest is 8.5% convertible quarterly. A. $ 84351.69

B. $ 52719.81
C. $ 75314.01
D. $ 13179.95
E. $ 43933.17

Answer 1

To find the present value of an annuity, you can use the formula: PV = PMT x (1 - (1 + r)^-n) / r. In this case, the present value of the annuity is $75,314.01

Step-by-step explanation:

To find the present value of an annuity, we can use 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
• n is the number of periods

In this case, the payment amount is $2,500, the interest rate is 8.5% converted quarterly, and the number of periods is 7 years (28 quarters).

Plugging in these values into the formula, the present value of the annuity is $75,314.01.