Question

Solve by using formulas. (Round your answer to the nearest cent.) 

Present value (in $) of an annuity due 

Answer 1

Present value of annuity is given by:

$$ P V=P\left[\frac{1-(1+r)^{-n}}{r}\right] $$

where:

$$ P=1800 \text { dollars, } r=5.6 \%=0.056, n=5 \text { years (Given Values) } $$

Therefore,

$$ P V=1800\left[\frac{1-(1+0.056)^{-5}}{0.056}\right]=7665.48 $$