Complete the following for the present value of an ordinary annuity. (Use Table 13.2.) Note: Do not round intermediate calculations. Round your answer to the nearest cent. Amount of annuity expected $ 750 Payment Annually Time 4 years Interest rate 6 % Present value (amount needed now to invest to receive annuity)
Complete the following for the present value of an ordinary annuity. (Use Table 13.2.) Note: Do not round intermediate calculations. Round your answer to the nearest cent. Amount of annuity expected $ 750 Payment Annually Time 4 years Interest rate 6 % Present value (amount needed now to invest to receive annuity)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:**Table 13.2: Present Value of an Annuity of $1**
This table provides the present value of an annuity of $1, calculated at various interest rates from 0.5% to 12% over different periods. Each row represents a specific time period, and each column represents a specific interest rate. The values indicate the present value factor for a $1 annuity received at the end of every period.
| Period | 0.5% | 1% | 2% | 3% | 4% | 5% | 6% | 7% | 8% | 9% | 10% | 11% | 12% |
|--------|-------|-------|-------|-------|-------|-------|-------|-------|-------|-------|-------|-------|-------|
| 1 | 0.9950 | 0.9901 | 0.9804 | 0.9709 | 0.9615 | 0.9524 | 0.9434 | 0.9346 | 0.9259 | 0.9174 | 0.9091 | 0.9009 | 0.8929 |
| 2 | 1.9851 | 1.9704 | 1.9416 | 1.9135 | 1.8861 | 1.8594 | 1.8334 | 1.8080 | 1.7833 | 1.7591 | 1.7355 | 1.7125 | 1.6901 |
| 3 | 2.9702 | 2.9410 | 2.8839 | 2.8286 | 2.7751 | 2.7232 | 2.6730 | 2.6243 | 2.5771 | 2.5313 | 2.4869 | 2.4437 | 2.4018 |
| 4 | 3.9505 | 3.9020 | 3.8077 | 3.7171 | 3.6299 | 3.5459 | 3.4651 | 3.3872 | 3.3121 | 3.239
.)
**Note:** Do not round intermediate calculations. Round your answer to the nearest cent.
**Table:**
| Amount of annuity expected | Payment | Time | Interest rate | Present value (amount needed now to invest to receive annuity) |
|----------------------------|---------|-----------|---------------|----------------------------------------------------------------|
| $750 | Annually| 4 years | 6% | |
This table represents the calculation needed to determine the present value of an ordinary annuity. The columns provide the following information:
- **Amount of annuity expected:** The annual payment amount expected, which is $750 in this case.
- **Payment:** Frequency of payment, listed as "Annually."
- **Time:** Duration of the annuity, given as 4 years.
- **Interest rate:** Annual interest rate applied, which is 6%.
- **Present value:** The amount needed now to invest in order to receive the annuity, which the user needs to calculate.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F52ef247d-15fe-4d4f-8ef0-cbdc99261781%2Feb1323f9-ca9b-4e79-9bcd-ed16b2763262%2Fumoj8sx_processed.png&w=3840&q=75)
Transcribed Image Text:**Instruction:**
Complete the following for the present value of an ordinary annuity. (Use [Table 13.2](#).)
**Note:** Do not round intermediate calculations. Round your answer to the nearest cent.
**Table:**
| Amount of annuity expected | Payment | Time | Interest rate | Present value (amount needed now to invest to receive annuity) |
|----------------------------|---------|-----------|---------------|----------------------------------------------------------------|
| $750 | Annually| 4 years | 6% | |
This table represents the calculation needed to determine the present value of an ordinary annuity. The columns provide the following information:
- **Amount of annuity expected:** The annual payment amount expected, which is $750 in this case.
- **Payment:** Frequency of payment, listed as "Annually."
- **Time:** Duration of the annuity, given as 4 years.
- **Interest rate:** Annual interest rate applied, which is 6%.
- **Present value:** The amount needed now to invest in order to receive the annuity, which the user needs to calculate.
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