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Suppose you are going to receive $14,500 per year for five years. The appropriate interest rate is 8 percent. a-1. What is the present value of the payments if they are in the form of an ordinary annuity
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Suppose you are going to receive $14,500 per year for five years. The appropriate interest rate is 8 percent. a-1. What is the present value of the payments if they are in the form of an ordinary annuity

User It Grunt
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2 votes

Answer:

PV of annuity = $57894.29554 rounded off to $57894.30

Step-by-step explanation:

An annuity is a series of cashflows that are of constant amount, occur after equal intervals of time and are for a finite/limited time period. An ordinary annuity is a kind of annuity where cash flows occur at the end of each period. The formula to calculate the present value of an annuity is attached.

PV annuity = 14500 * [ (1 - (1+0.08)^-5) / 0.08]

PV of annuity = $57894.29554 rounded off to $57894.30

Suppose you are going to receive $14,500 per year for five years. The appropriate-example-1
User Heeen
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