Find the present value of an annuity due with a monthly payment of $500 at 6% compounded monthly for 12 years.
| Present value | = | Monthly cash flow | * | Present value of annuity due of 1 | |||||
| = | $ 500.00 | * | 102.9871 | ||||||
| = | $ 51,493.56 | ||||||||
| Working: | |||||||||
| Present value of annuity due of 1 | = | ((1-(1+i)^-n)/i)*(1+i) | Where, | ||||||
| = | ((1-(1+0.005)^-144)/0.005)*(1+0.005) | i | = | 6%/12 | = | 0.005 | |||
| = | 102.9871169 | n | = | 12*12 | = | 144 | |||
Get Answers For Free
Most questions answered within 1 hours.