Find the present value of the annuity. Round to the nearest cent.
-Payments of $410 made annually for 13 years at 6% compounded annually

Question

Find the present value of the annuity. Round to the nearest cent. 
-Payments of $410 made annually for 13 years at 6% compounded annually

Quizplus · Accepted Answer

We can use the formula for the present value of an annuity:

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

where PV is the present value, PMT is the payment, r is the interest rate per period (in this case, the annual rate), and n is the number of periods (in this case, the number of years).

Plugging in the given values, we get:

PV = 410 x [(1 - (1 / (1 + 0.06)^13)) / 0.06]
PV = $3,629.60

Rounding to the nearest cent, we get choice C as the best answer. We can use the present value formula for an annuity:

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

where PV is the present value, PMT is the payment amount, r is the interest rate, and n is the number of periods.

Plugging in the given values, we get:

PV = $410 * ((1 - (1 + 0.06)^(-13))/0.06) = $3,629.60

Rounding to the nearest cent, the answer is $3,629.60, which is choice C.

Find the Present Value of the Annuity