document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1043216>Question 1043216</A>: <I><SPAN STYLE=\"word-break: break-all;\"> An investment will provide you with $100 at the end of each year for the next 10 years,What is the present value of that annuity if the discounted rate is 8% annually? </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #658416 by </B><A HREF=/tutors/aboutme.mpl?userid=addingup><B>addingup(3677)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=addingup><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=addingup><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=658416\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> We will use the formula for Present Value of an Annuity:<BR>\n" );
document.write( "P[1-{1+r)^-n}/r]<BR>\n" );
document.write( "where:<BR>\n" );
document.write( "P is the periodic payment = 100<BR>\n" );
document.write( "r is the rate per period = 8%<BR>\n" );
document.write( "-n is the number of periods = -10 (negative, your value decreases over time, so when you get the last 100 at year 10 there is no more left)<BR>\n" );
document.write( ":<BR>\n" );
document.write( "100[1-{1+0.08)^-10}/0.08] = 671 is your present value.<BR>\n" );
document.write( ":<BR>\n" );
document.write( "John </SPAN>\n" );
document.write( "</TD></TR></TABLE>\n" );