Question

1. What is the Present Value of an ORDINARY ANNUITY that has 12 annual payments of 3000 if the return is 12 %
2. What is the Present Value of a monthly annuity that pays  $ 250 per year for 10 years when investments make 9 % return annually.
3. Find the future value of 250,000 invested for 10 years at 12%.
4. Find the Future value of an annuity due of 450 per month for 3 years when returns are 10 % annually,

Answer 1

Dear student, only one question is allowed at a time. I am answering the first question

Present value of annuity

= P x [ 1 – ( 1 + r ) ^ - n ] / r

Where,

P = Annual Payments = $3,000

r = Rate of interest = 12% or 0.12

n = Number of periods = 12

So, as per above equation, present value of annuity

= $3,000 x [ 1 – ( 1.12 ^ - 12)] / 0.12

= $3,000 x [ 1 - 0.256675 ] / 0.12

= $3,000 x 0.743325 / 0.12

= $ 18,583.12

So, the present value of the annuity is $ 18,583.12