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What is the present value of a 8-year ordinary annuity with annual payments of $538, evaluated...

What is the present value of a 8-year ordinary annuity with annual payments of $538, evaluated at a 6 percent interest rate? Round it to two decimal places, i.e., 1234.45.

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Expert Solution

Present Value Of An Annuity
= C*[1-(1+i)^-n]/i]
Where,
C= Cash Flow per period
i = interest rate per period
n=number of period
= $538[ 1-(1+0.06)^-8 /0.06]
= $538[ 1-(1.06)^-8 /0.06]
= $538[ (0.3726) ] /0.06
= $3,340.87

jeff jeffy answered 2 years ago
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