107k views
2 votes
Find the present value of an annuity with payments of at the end of for years. the interest rate is compounded question content area bottom part 1 the present value of the annuity is ​$

1 Answer

2 votes

Final answer:

The present value of an annuity can be found using the formula PV = R * (1 - (1 + i)^(-n)) / i, where PV is the present value of the annuity, R is the payment amount at the end of each period, i is the interest rate per period, and n is the number of periods.

Step-by-step explanation:

The present value of an annuity can be found using the formula:

PV = R * (1 - (1 + i)^(-n)) / i

Where PV is the present value of the annuity, R is the payment amount at the end of each period, i is the interest rate per period, and n is the number of periods.

To calculate the present value, substitute the known values into the formula and solve for PV.

For example, if the payment amount is $100, the interest rate is 5%, and there are 4 periods, the present value would be:

PV = 100 * (1 - (1 + 0.05)^(-4)) / 0.05 = $372.02

User Jasmeet Singh
by
8.1k points

No related questions found

Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories