What is the present value of a 5-year ordinary annuity with annual payments of $200, evaluated at a 15 percent interest rate? Select one: O a

Finance Aug 13, 2020

What is the present value of a 5-year ordinary annuity with annual payments of $200, evaluated at a 15 percent interest rate? Select one: O a. 842.91 O b. $1,348.48 O c. $1,169.56 O d. 670.43

Expert Solution

Present value = Amount/(1+rate)^1 + Amount/(1+rate)^1 + Amount/(1+rate)^1 + Amount/(1+rate)^1 + Amount/(1+rate)^1 +........

Present Value = 200/(1+0.15)^1 + 200/(1+0.15)^2 + 200/(1+0.15)^3 + 200/(1+0.15)^4 + 200/(1+0.15)^5

= 670.43 Answer

The last option is correct.

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