Homework question help needed

label Accounting
account_circle Unassigned
schedule 1 Day
account_balance_wallet $5

What is the present value of a 5-year ordinary annuity with annual payments of $200, evaluated at a 15% interest rate?

Jun 24th, 2015

Thank you for the opportunity to help you with your question!

Given -

Annuity payment = $200

Interest rate = 15%

Number of years = 5

Present value interest factor of annuity = 3.3522 ..................(this value can be found from present value table or using online calculator, use 15% and 5 years as input)

Therefore, present value of annuity = $200 X  3.3522

Present value of annuity = $670.44

Ordinary annuity is one where payments are made at the end of the year.


Please let me know if you need any clarification. I'm always happy to answer your questions.
Jun 24th, 2015

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