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    Calculating present value of annuity

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    What is the present value of the following annuities?

    a. $2,500 a year for 10 years discounted back to the present at 7 percent
    b. $70 a year for 3 years discounted back to the present at 3 percent
    c. $280 a year for 7 years discounted back to the present at 6 percent
    d. $500 a year for 10 years discounted back to the present at 10 percent

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    Solution Preview

    a. $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 ...

    Solution Summary

    Solution depicts the steps to find out the present value of given annuities.

    $2.19

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