The present value of four $10,000 semiannual payments invested for 2 years at 12% compounded semiannually is $43,746.(PV of $1,FV of $1,PVA of $1,and FVA of $1)$\bold{\text{(Use appropriate factor(s)from the tables provided.)}}$

Question

Quizplus · Accepted Answer

The present value of an annuity (PVA) can be calculated using the formula $PVA = PMT \times \left[\frac{1 - (1 + r)^{-n}}{r}\right]$, where PMT is the payment amount, r is the interest rate per period, and n is the total number of periods. Given a semiannual interest rate of 6% (12% annual rate divided by 2) and 4 total payments (2 years times 2 payments per year), the present value would not equal $43,746 when calculated correctly.

The Present Value of Four $10,000 Semiannual Payments Invested for 2