Question

What is the present value of the following annuity? $2,420 every half year at the beginning of the period for the next 14 years, discounted back to the present at 18.86 percent per year, compounded semiannually Round the answer to two decimal places.

Answer 1

Present value is calculated as follows:-

=PV(rate,nper,pmt,fv,1)

=PV(18.86%/2,14*2,2420,,1)

=25830.51

Where,

rate is the periodic rate

nper is the number of periods

pv is the present value

1 is used when the payments occur at the beginning of the period.