Homework question help needed

Accounting
Tutor: None Selected Time limit: 1 Day

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! Hi, He observes that work expands so as to fill the time available for its completion.

Hi, Below is the solution to the problem

PV of an annuity is given by 

Pv = C*(1-(1+i)^-n)/i)

C = Cash flow per period

i = interest raten = number of payments

Pv= 200*(1-(1+0.15)^-5)/0.15)

200*(1+0.497)/0.15

200*9.98

the present value  will therefore be 

= $1996

thanks.

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

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