Question

What is the present value of an ordinary annuity paying

​$1 comma 7501,750

each year for

1515

​years, with an interest rate of

7.37.3

percent compounded​ annually? (Round to the nearest​ dollar.)

A.

​$15 comma 64115,641

B.

​$14 comma 41114,411

C.

​$20 comma 45420,454

D.

​$18 comma 122

Answer 1

A.

​$15 comma 64115,641

Present value of ordinary annuity				=	Annuity*Present value of annuity of 1
				=	$         1,750	*	8.937815
				=	$       15,641
Working:
Present value of annuity of 1				=	(1-(1+i)^-n)/i			Where,
				=	(1-(1+0.073)^-15)/0.073			i	7.30%
				=	8.93781508			n	15