Question

If quarterly payments are made for 15 years, find the value for n in the following present value ordinary annuity formula.

PV=P(1-(1+t)⁻π/t)

a. (45)
b. (60)
C. (15)
d. ( 15/4 )

Answer 1

When calculating the value for n in an ordinary annuity formula with quarterly payments over 15 years, n is found by multiplying the number of years by the number of quarters per year, resulting in 60 as the answer. The correct option is (b).

Step-by-step explanation:

If quarterly payments are made for 15 years, we need to find the value for n in the present value ordinary annuity formula. In this context, n represents the total number of payments. Since there are 4 quarters in a year, and payments are made quarterly over a period of 15 years, we calculate n as:

n = number of years × number of quarters per year

Therefore:

n = 15 years × 4 quarters/year = 60

The correct answer is (b) (60).