Question

What is the present value of a 20-year $10,000 ordinary annuity paid annually and earning 6% interest? In other words, if an ordinary annuity paid $10,000 annually for 20 years, earning 6% interest, what is the present value this annuity?

Answer #1

PV of Annuity:

Annuity is series of cash flows that are deposited at regular
intervals for specific period of time.

PV of Annuity = Cash Flow * [ 1 - [(1+r)^-n]] /r

r - Int rate per period = 6 % or 0.06

n - No. of periods = 20

Particulars |
Amount |

Cash Flow | $ 10,000.00 |

Int Rate | 6.0000% |

Periods | 20 |

PV of Annuity = Cash Flow * [ 1 - [(1+r)^-n]] /r

= $ 10000 * [ 1 - [(1+0.06)^-20]] /0.06

= $ 10000 * [ 1 - [(1.06)^-20]] /0.06

= $ 10000 * [ 1 - [0.3118]] /0.06

= $ 10000 * [0.6882]] /0.06

= $ 114699.21

**Present value of annuity = $
114699.21**

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annuity paid annually and earning 5% interest?
B. Repeat for an annuity due.

A.Calculate the present value of an annuity of $5,000 received
annually that begins today and continues for 10 years, assuming a
discount rate of 9%.
B. Joan invested $5,000 in an interest-bearing account earning
an 8% annual rate of interest compounded monthly. How much will the
account be worth at the end of 5 years, assuming all interest is
reinvested at the 8% rate?
C. Calculate the present value of an ordinary annuity of $5,000
received annually for 10 years,...

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

f. What is the present value of an ordinary annuity of $1,300
per year for 11 years discounted back to the present at 11
percent?
g. What is the present value of an annuity due of $1,300 per
year for 11 years discounted back to the present at 11
percent?

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i think it is true, please verify i am correct!

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Present value of an ordinary annuity. Fill in the missing
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LOADING... . Number of Payments or Years Annual Interest Rate
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