Final answer:
The present value of the annuity is approximately $5,050.62.
Step-by-step explanation:
To calculate the present value of an ordinary annuity, we use the present value of an annuity formula.
The formula is:
PV = PMT x (1 - (1 + r)^-n) / r
Where:
- PV is the present value of the annuity
- PMT is the payment per period
- r is the discount rate per period
- n is the number of periods
In this case, the payment per period is $800 for 7 years, and the annual discount rate is 4%. Plugging these values into the formula, we get:
PV = $800 x (1 - (1 + 0.04)^-7) / 0.04 ≈ $5,050.62