Question

What is the present value of $900 annuity payment over 6 years if interest rates are 10%

Answer 1

Answer:

$ 508.03

Explanation:

To calculate present value of an annuity, N, we can use the formula;

$N=\frac{A}{(1+r)^n}$

From the question, the future value of the annuity is A=$900, the percentageW interest rate per compounding period is r=10%=0.1, and the number of deposit to be made in the annuity is n=6

We plug the values into the formula to get:

$N=\frac{900}{(1+0.1)^6} = \frac{900}{1.1^{6} } = 508.03$

Therefore the present value is $508.03