What is the PV of an ordinary annuity with 10 payments of $2,700 if the appropriate interest rate is 5.5%? Group of answer choic
1 answer:
Answer:
The PV of an ordinary annuity with 10 payments of $2,700 if the appropriate interest rate is 5.5% is $20,352.
Step-by-step explanation:
P = PMT [(1 - (1 / (1 + r))) / r]
= 2,700 [(1 - (1 / (1 + 0.055))) / 0.05]
= 2,700 [(1 - (1 / (1 + 0.055))) / 0.05]
= 2,700 [(1 - (1 / (1.708)) / 0.05]
= 2,700 [(1 - 0.58)) / 0.05]
= 2,700 [(0.41457) / 0.05]
= 2,700(7.53)
=$ 20,352
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