The present value of an ordinary annuity with equal monthly payments of $300 over the next four years,assuming market interest rates are 12% per annum,is:
A) $911.20
B) $1170.59
C) $11 392.19
D) $18 366.78

Question

Quizplus · Accepted Answer

The present value (PV) of an ordinary annuity can be calculated using the formula: PV = P * [(1 - (1 + r)^-n) / r], where P is the payment amount, r is the monthly interest rate, and n is the total number of payments. Given a monthly payment of $300, an annual interest rate of 12% (or a monthly rate of 1%), and a total of 48 payments (4 years * 12 months), the calculation yields a present value of approximately $11,392.19, making option C correct.

The Present Value of an Ordinary Annuity with Equal Monthly