Question

Find the present value of the ordinary annuity. (Round your answer to the nearest cent.) Amount of Deposit " mueposit m Frequency Frequency quarterly n Rate Rate 14% Time the 25 yr t $400 $

Answer 1

present value of ordinary annuity = A*[1-(1+r)^(-n)]/r

here,

A = 400

r =14% per annum =>14%*3/12 =>3.5% per quarter (since quarterly compounding is given).=>0.035

n = 25 years*4 quarters.

=>100.

value of ordinary annuity = 400*[1-(1.035)^(-100)]/0.035

=>400* [0.9679399/0.035]

=>400*27.6554257

=>$11,062.17.

Answer 2

Find the present value of the ordinary annuity. (Round your answer to the nearest cent.)

Amount of Deposit     m	Frequency     n	Rate     r	Time     t
$500	annually	3%	15 yr