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Complete the following for the present value of an ordinary annuity. (Use Table 13.2.) (Do not round intermediate calculations. Round your answer to the nearest cent.)

Amount of annuity expected Payment Time Interest Present value (amount needed now to invest to receive annuity)
$900 Annually 4 Years 6% $
TABLE 13.2 13.2 Present value of an annuity of $1 Period 2% 3% 4% 5% 6% 7% 8% 4 0.9804 1.9416 2.8839 3.8077 4.7134 5.6014 6.4
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Answer #1

Correct Answer:

Amount of Annuity expected

Payment

Time

Interest

Present value

$            900.00

Annually

4 year

6%

$         3,118.6

Working:

PV of annuity = FV * factor rate at 6% after (4) periods

= 900 *3.4651

= $   3,118.6

End of answer.

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