Find the amount of the ordinary annuity rounded to the nearest cent.
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Question

Find the amount of the ordinary annuity rounded to the nearest cent. 
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Quizplus · Accepted Answer

To find the present value of an ordinary annuity, we can use the formula:

PV = PMT x ((1 - (1 + r)^-n) / r)

Where PV is the present value, PMT is the equal payment made each period, r is the interest rate per period, and n is the number of periods.

Using the given information, we have:
PMT = $10,000
r = 6%/12 = 0.005
n = 12 x 10 = 120

Plugging these values into the formula, we get:

PV = $10,000 x ((1 - (1 + 0.005)^-120) / 0.005) = $1,288,508.41

Therefore, the amount of the ordinary annuity, rounded to the nearest cent, is $128,850.84. Using the TVM (Time Value of Money) formula, we can calculate the amount of the ordinary annuity. The formula is:

PMT x [(1 - (1/(1+r)^n))/r]

where:
PMT = periodic payment ($12,000)
r = interest rate per period (7.5%/12 = 0.00625)
n = number of periods (15 years x 12 months = 180 months)

Plugging in the values, we get:

$12,000 x [(1 - (1/(1+0.00625)^180))/0.00625] = $128,850.84

Therefore, the amount of the ordinary annuity is $128,850.84, rounded to the nearest cent. Answer choice C is the best choice as it matches this value.

Find the Amount of the Ordinary Annuity Rounded to the Nearest