Question

Find the present value of ordinary annuity: Payment of $950 each year for 20 years at 9% compounded annually. Select the correct answer below: $8994.25 $8672.12 $7492.98 $6542.98 $5219.28

Answer 1

The present value of the ordinary annuity is $8,672.12.

Step-by-step explanation:

To find the present value of an ordinary annuity, we need to use the present value of an annuity formula:

PV = PMT * ((1 - (1 + r)^(-n)) / r)

In this case, the payment (PMT) is $950, the interest rate (r) is 9%, and the number of years (n) is 20. Plugging in these values, we get:

PV = 950 * ((1 - (1 + 0.09)^(-20)) / 0.09) = $8,672.12