Question

The present value of an ordinary annuity of​ $350 each year for five​ years, assuming an opportunity cost of 4​ percent, is​ ________.

Answer 1

We can calculate it by PVOA table.
PVOA means present value of an ordinary annuity.
PMT = $350
PMT means recurring payment.
time = 5 years and interest rate is 4%
So n = 5 and i = 4%
So we can calculate PVOA as

PVOA = PMT times (PVOA factor for n = 5 and i = 4%)

`= 350 * (4.452)` (PVOA factor PVOA table)

`= 1558.2`
So present value is $1558.2