Question

Find the present value of the annuity if the withdrawal is to be $600 per month for 21 months at 5% compounded monthly.

Answer 1

\[PV = P[\frac{1-(1+i)^{-n}}{i}]\]

P=600, i=0.05, n=21

\[PV =600[\frac{1-(1+0.05)^{-21}}{0.05}]\]


\[PV =600[\frac{1-(1.05)^{-21}}{0.05}]\]


\[PV =600[\frac{1-0.3589423646}{0.05}]\]


\[PV =600[\frac{0.6410576354}{0.05}]\]


\[PV =600[12.821152708]\]


\[PV =7692.6916248\]


\[PV =7692.69\]


So the present value of the annuity is $7,692.69

Answer 2

hmmmm i submitted that answer and they told me it was incorrect....

Answer 3

k let me double check

Answer 4

is that rate 5% the annual rate?

Answer 5

im assuming its monthly since thats what the question is asking but i'm not positive

Answer 6

how many tries you have left?

Answer 7

two more! but now the values have changed

Answer 8

Find the present value of the annuity if the withdrawal is to be $300 per month for 36 months at 10% compounded monthly.

Answer 9

try 9297.37

Answer 10

I'm sure it has to do with the interest rate

Answer 11

is this for the second set of values or the first question i asked?

Answer 12

second set

Answer 13

that was correct! how did you get that??

Answer 14

nevermind i got the formula! thanks so much!

Answer 15

\[PV = P[\frac{1-(1+i)^{-n}}{i}]\]

P=600, i=0.05, n=21

\[PV =300[\frac{1-(1+\frac{0.10}{12})^{-36}}{\frac{0.10}{12}}]\]


\[PV =300[\frac{1-(1+0.00833333333333)^{-36}}{0.00833333333333}]\]


\[PV =300[\frac{1-(1.00833333333333)^{-36}}{0.00833333333333}]\]


\[PV =300[\frac{1-0.74173970345571}{0.00833333333333}]\]


\[PV =300[\frac{0.25826029654429}{0.00833333333333}]\]


\[PV =300[30.9912355853271]\]


\[PV = 9297.37067559812\]


\[PV = 9297.37\]

Answer 16

oops I meant to write P=300, i=0.1/12, and n=36