Question

Find the present value of the ordinary annuity.

Payments of $93 made quarterly for  at 5.7% compounded quarterly

Select one:

A. $2873.94

B. $2839.80

C. $2820.64

D. $2865.33

Answer 1

we know that present value of the ordinary annuity is given by,

where,

PMT = periodic payment = $93

r = annual interest rate = 5.7% = 0.057

m = number of annuity payments per year = 4 as we have quarterly payments

n = number of years = 10

Hence,

rounding to nearest cent we can say that,

we can say that option C) is correct