Find the PV of a 26-year annuity-immediate with payments of 1, 2, 3, ..., 26 at...

Find the PV of a 26-year annuity-immediate with payments of 1, 2, 3, ..., 26 at an annual effective rate of interest

i = 7%.

Solutions

Expert Solution

PV of annuity due = Annuity + Annuity*(1-1/(1+rate)^(number of terms-1))/rate

= A + A*(1-1/(1+7%)^(26-1))/7%

=A+ A*11.65358318

=12.65358318 A

The present value of an annuity immediate will be 12.65358318 multiplied by the value of the annuity immediate.

In formula terms

PV = 12.65358318 * A

jeff jeffy answered 2 years ago

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