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What is the present value of the following annuity payments: $500 each 6 months for 5...

  1. What is the present value of the following annuity payments: $500 each 6 months for 5 years at an interest rate of 10% compounded semiannually?

Solutions

Expert Solution

We need to compute PV of annuity, formula for which is:

PV =

P = $500, n = 5 * 2 = 10 semi-annual periods, r = 10%/2 = 5% (semi-annual)

PV = 500 * 7.721735

PV = $3,860.87

jeff jeffy answered 2 years ago
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