An annuity pays $500 per year for 8 years beginning one year
from today.
remaining value of the annuity immediately before the fourth $500
payment? Assume an interest rate of 2% APR.
The correct answer is $2,403. However, I just don't know how to get to it.
Immediately before the fourth payment, there are 5 annual payments left with the first payment to occur immediately.
The present value of these remaining 5 payments is calculated using PV function in Excel ;
rate = 2%
nper = 5
pmt = 500
fv = 0 (There is no amount receivable at the end of the period, apart from the annuity payment)
type = 1 (the first of the 5 remaining payments occurs immediately, hence it is like an annuity due with 5 payments)
PV is calculated to be $2,403.83.
An annuity pays $500 per year for 8 years beginning one year from today. remaining value...
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Please use financial calculator
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