To determine To calculate: The present value of each ordinary annuity. Explanation Given: The payments made at the end of each year is $4,210 for the period of 8 years. The rate of interest is 5.6% and is interest is compounded semi-annually. Formula used: P = R [ 1 − ( 1 + i ) − n i ] Calculation: To compute the amount earned can be calculated by using the formula: P = R [ 1 − ( 1 + i ) − n i ] P is the present value of an annuity, R is the payment at the end of each year, i is the interest rate per year, n is the number of years. The interest is compounded semi-annually, therefore, the rate will be divided by 2 and time will be multiplied by 2. R = $ 4 , 210 , i = 0.056 2 and n = 8 × 2 By using above formula: P = R [ 1 − ( 1 + i ) − n i ] = $ 4 , 210 [ 1 − ( 1 + 0

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ISBN: 9780135240687

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Chapter 5, Problem 44RE

To determine

To calculate: The present value of each ordinary annuity.

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Chapter 5, Problem 43RE

Chapter 5, Problem 45RE

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