Question

Find the present value of an ordinary annuity of Rs. 3,500 per year for 3 years at 12% per annum? *​

Answer 1

Answer:

sry but I hope something is wrong in W

Answer 2

Answer:

The correct answer is : present value of ordinary annuity is Rs.8406.409

Step-by-step explanation:

Concept

• We can say that, given a specific rate of return, or discount rate, the present value of an annuity is the current value of the future payments from an annuity.
• Also the present value of the annuity decreases as the discount rate increases.

• The formula for determining the present value of an annuity is PV = amount of an

• Furthermore, individual annuity payment multiplied by $P = PMT [ 1- [(1/1+r)^n] /r]$
• where: P =Present value of your annuity stream, PMT = amount of each payment, r= Discount or interest rate.

Given

PMT=RS.3500 ,

n=3 years ,

r=12/100=0.12 is given

Find

The present value of a regular annuity must be determined.

Solution

$P = PMT [ 1-[(1/1+r)^n] /r\\P= 3500 [1-(1/1+0.12)^3/0.12]$

p=8406.409

Hence the present value of ordinary annuity is Rs.8406.409.

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