Question

Suppose your mom decides to gift you 10,000 every year starting from today
for the next five years. You deposit this amount in a bank as and when you receive and get
10% per annum interest rate compounded annually. What is the present value of this annuity?​

Answer 1

Answer:

10,000

Step-by-step explanation:

As you have asked the present value, it will be 10,000.

But, the answer you are seeking for is I guess the value of the annuity after 5 years.

It will be as below :

10000×(1+ 0.16)^5+10000×(1+0.16)⁴+ 10000×(1+0.16)³+ 10000×(1+ 0.16)²+10000×(1+ 0.16)¹+10000×(1+ 0.16)^0

= 10000× ( (1.16)^(5+4+3+2+1+0))

= 10000 × 1.16^15

= 10000 × 9.26552087

= 92655.2087

≈ 92655.21