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Popular Word Problems >

Find the present value of an ordinary annuity with payments of 40,000.00 paid annually for 25 years at 4% compounded annually.

Solution

solve for

t h e p rese n t v a l u e o f an or d ina ry ann u i t y w i t h p a y m e n t s o f ​​40, 000.00​ p ai d ann u a ll y f or 25​ ye a rs a t 4%​ co m p o u n d e d ann u a ll y .

Solution

Amount : 106633.45

Solution steps

Translate the problem into an equation:

A = 40000 (1 + \frac{0.04}{1})^{1 \cdot 25}

40000 (1 + \frac{0.04}{1})^{1 \cdot 25} = 106633.45325 \dots

Round to the nearest hundredth:

106633.45

Amount : 106633.45

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