Answer to Question #268445 in Economics for Lax

Question

Find the present value of an ordinary annuity for;

(a) P5500 per quarter for 6.5years at 5.6% compounded quarterly.

(b)P150 per month for 3years at 8% compounded semi-annually.

Answer 1

a)

$$5500=S\times\frac{1.4(1+1.4)^{26}}{(1+1.4)^{26}-1}$$

$$S=3928.57$$

b)

$$150=S\times\frac{1.3(1+1.3)^{6}}{(1+1.3)^{6}-1}$$

$$S=115.38$$