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# Present Value of Ordinary Annuity

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1.) On January 1, 2004, Carly Company decided to begin accumulating a fund for asset replacement five years later. The company plans to make five annual deposits of \$30,000 at 9% each January 1 beginning in 2004. What will be the balance in the fund, within \$10, on January 1, 2009 ( one year after the last deposit)? The following 9% Interest factors may be used.

Present Value of Ordinary Annuity Future Value of Ordinary Annuity
4 periods 3.2397 4.5731
5 periods 3.8897 5.9847
6 periods 4.4859 7.5233

2.) Your uncle promises to give you \$550 per quarter for the next five years starting today. How much is his promise worth right now if the interest rate is 8% compounded quarterly?

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In this solution, we find what the balance of a fund is based on the present value of ordinary annuity.

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1.) On January 1, 2004, Carly Company decided to begin accumulating a fund for asset replacement five years later. The company plans to make five annual deposits of \$30,000 at 9% each January 1 beginning in 2004. What will be the balance in the fund, within \$10, on January 1, 2009 ( one year after the last deposit)? The following 9% Interest factors may be used.

Present Value of Ordinary Annuity Future ...

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