is the PV of an annuity due with 5 payments of $2,500 at an interest rate of 5.5%?
A)$11,262.88
B)$11,826.02
C)$12,417.32
D)$13,038.19
E)$13,690.10

Question

Quizplus · Accepted Answer

The present value of an annuity due is calculated as the present value of the first payment plus the present value of the remaining payments. The present value of the first payment is simply the payment amount. The present value of the remaining payments is calculated as the present value of an ordinary annuity with n-1 payments.In this case, the payment amount is $2,500, the interest rate is 5.5%, and there are 5 payments. The present value of the first payment is $2,500. The present value of the remaining payments is $11,262.88. Therefore, the present value of the annuity due is $11,262.88 + $2,500 = $13,762.88.

Is the PV of an Annuity Due with 5 Payments