Compute the present value of an ordinary annuity that pays $13,000 per year for 15 years at 10%. Present value of ordinary annuity of $1:
$$\begin{array} { | c | c | c | c | c | c | }
\hline & 7 \% & 8 \% & 9 \% & 10 \% & 12 \% \
\hline 11 & 7.499 & 7.139 & 6.805 & 6.495 & 5.938 \
\hline 12 & 7.943 & 7.536 & 7.161 & 6.814 & 6.194 \
\hline 13 & 8.358 & 7.904 & 7.487 & 7.103 & 6.424 \
\hline 14 & 8.745 & 8.244 & 7.786 & 7.367 & 6.628 \
\hline 15 & 9.108 & 8.559 & 8.061 & 7.606 & 6.811 \
\hline
\end{array}$$

Question

Compute the present value of an ordinary annuity that pays $13,000 per year for 15 years at 10%. Present value of ordinary annuity of $1:
$$\begin{array} { | c | c | c | c | c | c | } 
\hline & 7 \% & 8 \% & 9 \% & 10 \% & 12 \% \
\hline 11 & 7.499 & 7.139 & 6.805 & 6.495 & 5.938 \
\hline 12 & 7.943 & 7.536 & 7.161 & 6.814 & 6.194 \
\hline 13 & 8.358 & 7.904 & 7.487 & 7.103 & 6.424 \
\hline 14 & 8.745 & 8.244 & 7.786 & 7.367 & 6.628 \
\hline 15 & 9.108 & 8.559 & 8.061 & 7.606 & 6.811 \
\hline
\end{array}$$

Quizplus · Accepted Answer

The present value of the annuity is found by multiplying the annual payment by the present value factor for an ordinary annuity at the given interest rate and time period. Here, for 15 years at 10%, the factor is 7.606. Thus, the present value is $13,000 * 7.606 = $98,878.

Compute the Present Value of an Ordinary Annuity That Pays