Using the present value tables, compute the present value of an ordinary annuity which pays $3,000 per year for 15 years, discounted at 9%.
A)$24,183
B)$24,200
C)$23,180
D)$25,390

Question

Quizplus · Accepted Answer

Using the present value of an ordinary annuity table for n=15 and i=9%, we find the factor to be 8.5594. Multiplying this factor by the annual payment of $3,000 gives a present value of $25,678.20. However, this is the present value of the annuity due, so we must subtract one year's payment of $3,000 to get the present value of the ordinary annuity. This gives a final answer of $24,183.

Using the Present Value Tables, Compute the Present Value of an Ordinary