209k views
0 votes
what is the present value of an annuity that pays $1 at the end of each year for the next 15 years with an annual effective interest rate 6.5% g

1 Answer

4 votes

Answer:

PV= $9.40

Step-by-step explanation:

Giving the following information:

Annual payment= $1

Interest rate= 6.5%

Number of periods= 15 years

First, we need to calculate the future value using the following formula:

FV= {A*[(1+i)^n-1]}/i

A= annual payment

FV= {1*[(1.065^15) - 1]} / 0.065

FV= $24.18

Now, the present value:

PV= FV/(1+i)^n

PV= 24.18 / 1.065^15

PV= $9.40

User Ozooxo
by
8.3k points

No related questions found

Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories