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Find the present value of an ordinary annuity with deposits of $19,692 quarterly for 3 years at 4.8% compounded quarterly.

What is the present value?
(Round to the nearest cent.)

1 Answer

6 votes

Explanation:

To find the present value of an ordinary annuity, we can use the present value of annuity formula:

PV = P * (1 - (1 + r)^(-n)) / r

Where:

PV = Present value

P = Periodic payment

r = Interest rate per period

n = Number of periods

In this case, the periodic payment is $19,692, the interest rate is 4.8% (or 0.048) compounded quarterly, and the number of periods is 3 years, which corresponds to 12 quarters.

Let's plug these values into the formula and calculate the present value:

PV = 19692 * (1 - (1 + 0.048/4)^(-12)) / (0.048/4)

Calculating this expression, the present value of the annuity is approximately $69,995.46 (rounded to the nearest cent).

Therefore, the present value of the ordinary annuity is $69,995.46.

User Yevhen Bobrov
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