Final answer:
To find the present value of an ordinary annuity with 8 annual payments of $6,980 at a 4% interest rate, you use the present value of an ordinary annuity formula, substituting the given values into the formula to calculate the present value.
Step-by-step explanation:
To calculate the present value (PV) of an ordinary annuity with 8 annual payments of $6,980 at an interest rate of 4%, we can use the present value of an ordinary annuity formula:
PV = PMT × [(1 - (1 + r)^-n) / r]
Where:
PMT = Periodic payment ($6,980)
r = Periodic interest rate (0.04 for 4%)
n = Number of periods (8)
Using the formula, we calculate the PV as follows:
PV = $6,980 × [(1 - (1 + 0.04)^-8) / 0.04]
After calculating the above expression, you will find the present value of the annuity.
Note that the given information related to other financial calculations such as a $12,000 annuity for 30 years, a 15 year student loan, and a two-year bond are not directly relevant to solving this particular question.