Question

2.

Find the present value.
Amount per Payment: $1,000

Payment at the End of Each: Year

Number of Years: 8

Interest Rate: 6%

Compounded: Annually

Answer 1

Number of years = n = 8
Interest rate = r = 0.06
Payment per period = P = 1000

The present value can be calculated by the following formula:


`PV =P ((1-(1+r)^(-n) )/(r))`

Using the values, we get:


`PV=1000( (1-(1+0.06)^(-8) )/(0.06) )=6209.79`

Thus, the present value will be $6209.79