Calculating Present Value of Annuities
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What is the Present Value of the following annuities?
1. $2,500 a year for 10 years discounted back to the present at 7 percent.
2. $70 a year for 3 years discounted back to the present at 3 percent.
3. $280 a year for 7 years discounted back to the present at 6 percent
4. $500 a year for 10 years discounted back to the present at 10 percent
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Solution Summary
The solution explains the formulas and methodology to calculate present value of ordinary annuities.
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Solution:
1)
$2,500 a year for 10 years discounted back to the present at 7 percent.
C=periodic payment=$2500
n=number of period=10
i=discount rate per period=7%
Present Value (P)of an ordinary annuity is given ...
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- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India
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