Answer/Discussion
to 1a
Present value of an ordinary annuity:
$2000 per quarter for 5 ½ years at the rate of 7% compounded
quarterly.
*7% in decimal form *Comp. quarterly - 4 times per year
*PV of an ord. annuity
*Plug in values into form.
*Calculate number inside ( ) and exp.
*Raise inside of ( ) to the -22nd power
*Calculate fraction
The present value of the given ordinary annuity would be $36260.54. (return
to problem 1a)
Answer/Discussion
to 2a
Present value of an annuity (not ordinary):
$700 paid at the beginning of each month for 10 years at the rate of
8 1/4% compounded monthly.
*81/4% = 8.25% in decimal form *Comp. monthly - 12 times per year
*PV of an annuity (not ord.)
*Plug in values into form.
*Calc. number inside ( ) and exp.
*Raise inside of ( ) to the -119th power
*Calculate fraction
The present value for the given annuity (not ordinary) is $57464.12. (return
to problem 2a)
Answer/Discussion
to 3a
$5000 every 6 months for 12 years at the rate of 5% compounded semiannually.
*5 % in decimal form *Comp. semiannually - 2 times per year
Answer/Discussion
to 1a 
