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