What is the present value of an 8-year annuity of $100 if the discount rate is 5%?

Finance Nov 24, 2020

Expert Solution

PVOrdinary Annuity = C*[(1-(1+i/100)^(-n))/(i/100)]C = Cash flow per periodi = interest raten = number of paymentsPV= 100*((1-(1+ 5/100)^-8)/(5/100))PV = 646.32Using Calculator: press buttons "2ND"+"FV" then assignPMT =100I/Y =5N =8FV = 0CPT PVUsing Excel=PV(rate,nper,pmt,FV,type)=PV(5/(100),8,,PV,)

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