Present Value of an Annuity What is the present value of a $400 annuity payment over...

Present Value of an Annuity What is the present value of a $400 annuity payment over 6 years if interest rates are 9 percent?

$670.84

$2,013.18

$238.51

$1,794.37

Expert Solution

	Present value of annuity	P×[1-(1÷(1+r)^n)]÷r

	Here,

1	Interest rate per annum	9.00%
2	Number of years	6
3	Number of compoundings per per annum	1
4 = 1÷3	Interest rate per period ( r)	9.00%
5 = 2×3	Number of periods (n)	6
	Payment per period (P)	$ 400

	Present value of annuity	$ 1,794.37
		400*[1-(1/(1+9%)^6]/9%

jeff jeffy answered 3 years ago

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