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Find the present value of the ordinary annuity. (Round your answer to the nearest cent.) $1500/semiannual...

Find the present value of the ordinary annuity. (Round your answer to the nearest cent.)

$1500/semiannual period for 7 years at 3%/year compounded semiannually

Solutions

Expert Solution

Present Value of annuity = Peroidic payment * PVAF ( Peroidic rate, Number of periods )

                                    = 1500 * PVAF( 3%/2, 7 * 2 )

                                    = 1500 * PVAF (1.5%, 14)

                                   = 1500 * [ 1/1.015 + 1/1.0152 + ...... + 1/1.01514 ]

                                   = 1500 * 12.5434

                                   = $ 18815.07 Answer

Hope you understand the solution.

jeff jeffy answered 1 year ago
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