Compute the present value of an annuity of 812 per year for

Compute the present value of an annuity of $ 812 per year for 20 years, given a discount rate of 6 percent per annum. Assume that the first cash flow will occur one year from today (that is, att- 1). (Round your answer to 2 decimal places; record your answer without commas and without a dollar sign). Your Answer:

Solution

Present value of Annuity = Annuity amount per year * Annuity factor for \'n\' years at \'r\' discount

rate

Annuity per year = $812

n =20 years

r =6%

Present value of Annuity = 812 * 12.15812

= 9872.39