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You will receive $400 per year for the next 3 years. What is the PV of the payments if the interest rate is 7.3%? Roiund your answer to 2 decimals, for example 100.12.

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Answer #1

Present value of Annuity = A*[(1-(1+r)-n)/r]

Where

A - Annuity payment = 400

r - rate per period = 7.3%

n - no. of periods = 3

Present value of Annuity = 400* [(1-(1+.073)^-3)/.073]

= 400* [(1- 0.80947014207 )/.073]

= 400* [ 0.19052985793 /.073]

= 400* 2.60999805384

= 1044.00

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