what the present value of a $900 annuity payment over five years if interest rates are…
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Question “what the present value of a $900 annuity payment over five years if interest rates are…”
interest rates are 8 percent (Do not round intermediate
calculations and round your final answer to 2 decimal places
Answer
Present Value of an Ordinary Annuity
We have an annual payment (P) of $900 for
Annual interest rates (r) = 8.0% per annum
5 years
The Present Value of an Ordinary Annuity = P x (1 – (1 / (1 +r) n/r).
$900 = [1-(1) / (1 + 0.08 _ / 0.08]
= $900 x [1- (1 / 146932808)/ 0.08]
= $900 x [1-0.68058320/ 0.08]
= $900 x [0.3194168080 / 0.08]
= $900 x 3.99271004
= $3,593.44
“So, the Present Valuation of the Annuity will be $3,593.44”
Conclusion
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