Find the present value of an annuity with annual payments of $3,090 at 5.45%, compounded annually for 28 years.Round to the nearest cent.
A)$\quad P V = \$ 43,809.22$
B) $\quad P V = \$ 43,866.33$
C) $\quad P V = \$ 43,923.44$
D) $\quad P V = \$ 91,235.34$
E) $\quad P V = \$ 41,673.01$

Question

Find the present value of an annuity with annual payments of $3,090 at 5.45%, compounded annually for 28 years.Round to the nearest cent. 
A)$\quad P V = \$ 43,809.22$
B) $\quad P V = \$ 43,866.33$
C) $\quad P V = \$ 43,923.44$
D) $\quad P V = \$ 91,235.34$
E) $\quad P V = \$ 41,673.01$

Quizplus · Accepted Answer

We can use the formula for the present value of an annuity:
PV = Pmt * ((1 - (1 / (1 + r)^n)) / r)
where Pmt is the annual payment, r is the annual interest rate, and n is the number of years.

Substituting the given values, we get:
PV = 3090 * ((1 - (1 / (1 + 0.0545)^28)) / 0.0545)
PV = 3089.9998... which rounds to $3,090.00

Therefore, the best choice is B, which is the closest to the calculated value.

Find the Present Value of an Annuity with Annual Payments PV=$43,809.22\quad P V = \$ 43,809.22PV=$43,809.22

Find the Present Value of an Annuity with Annual Payments $\quad P V = \$ 43,809.22$