Find the present value of an ordinary annuity with deposits
Find the present value of an ordinary annuity with deposits of $7,576 quarterly for 9 years at 4.8% compounded quarterly. What is the present value?
Solution
PV = PMT*[1 - (1/(1 + r/n)^(n*t))]/(r/n)
PMT = 7576
r = 4.8% = 0.048
n = 4
t = 9 yrs compounded quarterly
n*t = 9*4 = 36 times
PV = 7576*[1 - (1/(1 + 0.048/4)^36)]/(0.048/4)
PV = $220410.50
