**Present Value of an Annuity Calculation**This section provides guidance on calculating the present value of an annuity using a specific formula. The formula is:\[ p = m \left[ \frac{1 - (1 + \frac{r}{n})^{-nt}}{\frac{r}{n}} \right] \]Where:- $ p $ is the present value- $ m $ is the payment amount ($50)- $ r $ is the interest rate (5%)- $ t $ is the time period in years (3 years)- $ n $ is the number of compounding periods per year (assumed to be 12)**Instructions:**Use this formula with the given values to calculate the annuity's present value. Remember to round your answer to the nearest cent. An input box is provided for you to enter your calculated result. If assistance is needed, refer to the "Need Help?" feature for more information.

Given: m = $50 r = 5% t = 3years n = 12 Formula: P=m1-1+rn-ntrn

Answered: Iculator to eva 1 P = m values of the v…

Business

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Iculator to eva 1 P = m values of the v $50; 5%; 3 y

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

**Present Value of an Annuity Calculation**

This section provides guidance on calculating the present value of an annuity using a specific formula.

The formula is:
\[ p = m \left[ \frac{1 - (1 + \frac{r}{n})^{-nt}}{\frac{r}{n}} \right] \]

Where:
- $ p $ is the present value
- $ m $ is the payment amount ($50)
- $ r $ is the interest rate (5%)
- $ t $ is the time period in years (3 years)
- $ n $ is the number of compounding periods per year (assumed to be 12)

**Instructions:**
Use this formula with the given values to calculate the annuity's present value. Remember to round your answer to the nearest cent.

An input box is provided for you to enter your calculated result. If assistance is needed, refer to the "Need Help?" feature for more information.

Expert Solution

Step 1

Given:

m = $50

r = 5%

t = 3years

n = 12

Formula:

$P = m [\frac{1 - {(1 + \frac{r}{n})}^{- nt}}{\frac{r}{n}}]$

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