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II. Find the present value of $10,000 received at the start of every year for 20 years if the interest rate is J1 = 12% p.A. And if the first payment of $10,000 is received at the end of 10 years

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raphealnwobi

Answer:

$26934.56

Step-by-step explanation:

The present value of an annuity is the current value of payments gotten from an annuity in the future, given a rate of return, or discount rate. The present value of an annuity (PVOA) is given by the formula:

[tex]PVOA=payment*\frac{[1-(1+r)^{-n}]/r}{(1+r)^{t-1}}[/tex]

n = 20 years, t = 10 years, r =12% = 0.12, payment = $10000

[tex]PVOA=10000*\frac{[1-(1+0.12)^{-20}]/ 0.12}{(1+0.12)^{10-1}}[/tex] = $26934.56

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