Final answer:
To calculate the present value of the ordinary annuity, use the formula: Present Value = Cash Flow × [(1 - (1 + Interest Rate)^(-Number of Periods)) / Interest Rate]. Plugging in the given values yields a present value of $8,053.04.
Step-by-step explanation:
An ordinary annuity is a series of equal cash flows made at regular intervals. In this case, the annuity consists of payments of $800 per year for 17 years. The formula to calculate the present value of an ordinary annuity is:
Present Value = Cash Flow × [(1 - (1 + Interest Rate)^(-Number of Periods)) / Interest Rate]
Plugging in the given values, the calculation becomes:
Present Value = $800 × [1 - (1 + 0.095)^(-17)] / 0.095
Using a calculator, you can find the present value of the annuity to be $8,053.04.