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What is the present value of an annuity that consists of 15 semiannual payments of $1,000 at the interest rate of 9% per year

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Answer #1

Solution

Answer-10740

Present value of annuity=Annuity payment*((1-(1/(1+r)^n))/r)

Where r=intrest rate per period=9/2=4.5% semiannual

n=number of periods=15

Annuity payment=$1000

Present value of annuity=1000*((1-(1/(1+.045)^15))/.045)

=10739.55

Thus present value of annuity=10740

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