Homework Answers
Annual Payment = $1,000
Quarterly Payment = $1,000 / 4
Quarterly Payment = $250
Annual Interest Rate = 6.00%
Quarterly Interest Rate = 1.50%
Period = 25 years or 100 quarters
Present Value = $250/1.015 + $250/1.015^2 + … + $250/1.015^99 +
$250/1.015^100
Present Value = $250 * (1 - (1/1.015)^100) / 0.015
Present Value = $250 * 51.624704
Present Value = $12,906.18
So, present value of the annuity is $12,906.18
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