What is the present value of an ordinary annuity of $1550 each year for 15 years, with an interest rate of 6.6 percent per annum?
A)$17 589
B)$16 500
C)$14 481
D)$10 500

Question

Quizplus · Accepted Answer

We can use the formula for the present value of an ordinary annuity:

PV = PMT x ((1 - (1 + r)^-n) / r)

where PV is the present value, PMT is the annual payment, r is the interest rate per period, and n is the number of periods.

Plugging in the given values, we get:

PV = 1550 x ((1 - (1 + 0.066)^-15) / 0.066)
PV = $14,481.15

Therefore, the present value of the annuity is $14,481.15. Choice C is the correct answer.

What Is the Present Value of an Ordinary Annuity of $1550