Question

What's the present value of $850 annuity payments over five years if the interest rates are 9%?

Answer 1

$3,306.20

Step-by-step explanation:

The present value of any payments can be calculated using the following formula:

Present value=R((1-(1+i)^-n)/i)

R= annuity payment =$850 in this case

i=interest rate=9%

n=number of payments=5

Present value=$850((1-(1+9%)^-5)/9%)

=$3,306.20