Question

Amount of payment $12000.00 Payment payable semiannually 8Years Interest 7% Value of annuity

Answer 1

Answer:

$992.227

Step-by-step explanation:

We have given amount of payment =$12000

Total time =8 years, as payment is payable semiannually so total period = 8×2=16 period

Rate of interest =7% annually so 3.5% semiannually

Present value annuity factor for 16 period at rate of 3.5%

$=\sum \frac{1}{(1+3.5)^1}+\frac{1}{(1+3.5)^2}+\frac{1}{(1+3.5)^3}+----------------\frac{1}{(1+3.5)^{16}}=12.094$

So annuity $=\frac{total\ payment}{present\ value\ annuity\ factor}=\frac{ 12000}{12.094}= 992.227$