Answer to Question #320574 in Mechanical Engineering for Jhonny

Question

4.) An engineer is entitled to receive P25,000 at the beginning of each year for 18 years. If the rate of

interest is 4% compounded annually.

1. What is the present value of this annuity at the time he is supposed to receive the first

payment?

2. What is the sum of this annuity at the end of the 18th year?

3. Find the difference between the sum of this annuity which is paid at the beginning of

each year and an annuity paid at the end of each year.

Ans. 1. P329,141.72 2. P666,780.73 3. P25,645.41

Answer 1

Our periodic payments, it's gonna be $1400. The interest is compounded annually, so it could just leave it as is. So that interest is 0.6 And since it's compounded annually, we just need the number of years, which is eight. So these are formula. So we have P is equal to our our value. 1400 times, one minus parentheses, 1.6 to the negative. Eight. Power over 0.6. So we're going to put that in the calculator, so that number is gonna give us 8693 and 71 cents.