Question

Andrea's opportunity cost rate is 12 percent compounded annually. how much must he deposit in an account today if he wants to receive $2,100 at the beginning of each of the next seven years? use the equation method to determine the amount.

Answer 1

$9583.89

Step-by-step explanation:

value of each payment (P): $2,100

interest rate per period (r): 12/100 = 0.12

number or periods (n): 7

present value of annuity (PV): ??

using the annuity formula:
`PV = P * (1 - (1 + r )^(-n) )/(r)`

PV = $9583.89