Question

An annuity pays $500 per year for 8 years beginning one year from today. remaining value...

  1. 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.

0 0
Add a comment Improve this question Transcribed image text
Answer #1

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.

- fo A1 A 1 ($2,403.86) =PV(2%,5,500,0,1) D E B C

Add a comment
Know the answer?
Add Answer to:
An annuity pays $500 per year for 8 years beginning one year from today. remaining value...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT