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