Iculator to eva 1 P = m values of the v $50; 5%; 3 y
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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb020c391-051d-4df7-9efc-8e680de59ef9%2F41e579af-041f-45a6-830d-e92a8ef96ddb%2F72e7ytn_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**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:
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