Find the present value of an ordinary annuity which has payments of​ $1200 per year for 18 years at 6​% compounded annually. ​(Round to the nearest​ cent.)

Question

Find the present value of an ordinary annuity which has payments of​ $1200 per year for 18 years at 6​% compounded annually. ​(Round to the nearest​ cent.)

Answer 1

Here's the formula: fv=p(1+int/c)^(cn)

future value

principal

int

compound

yrs

Because 1200 is added annually; this is to be done 18 times.

fv=1200(1+.06/1)=1272

2620

4049

5564

7170

8872

10676

12589

14616

16765

19043

21458

24018

26731

29607

32655

35886

39311

$ 42924.70944........