Final answer:
The Present Value (PV) of an ordinary annuity can be calculated using the formula PV = PMT x [(1 - (1 + r)^(-n)) / r]. In this case, the PV of an annuity with 10 payments of $2,700 and an interest rate of 5.5% is approximately $24,093.47.
Step-by-step explanation:
The Present Value (PV) of an ordinary annuity 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, and n is the number of payments.
In this case, the payment amount is $2,700 and the number of payments is 10. The appropriate interest rate is 5.5%.
Plugging these values into the formula, we get:
PV = $2,700 x [(1 - (1 + 0.055)^(-10)) / 0.055]
Solving this equation, the PV of the annuity is approximately $24,093.47.