document.write( "Question 1201579: Helen will be investing an amount of $3900 annually at the end of each of the following four years. She will earn compounded interest of 14% per annum. Calculate the present value of Helen’s investment. \n" ); document.write( "

Algebra.Com's Answer #836046 by ikleyn(52781) $\"\"$ $\"About$

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\n" ); document.write( "Helen will be investing an amount of $3900 annually at the end of each of the following
\n" ); document.write( "four years. She will earn compounded interest of 14% per annum.
\n" ); document.write( "Calculate the present value of Helen’s investment.
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document.write( "This saving plan of depositing $3900 annually at the end of each of the following 4 years \r\n" );
document.write( "at a yearly interest rate of 14%, compounded annually, is called an ORDINARY ANNUITY plan.\r\n" );
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document.write( "There is a formula to calculate the total amount which the plan generate at the end.\r\n" );
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document.write( "The formula is\r\n" );
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document.write( "    f = ,\r\n" );
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document.write( "f is the future value;\r\n" );
document.write( "p is the regular payment at the end of each time period (yearly payment in this case);\r\n" );
document.write( "r is the interest rate per time period;\r\n" );
document.write( "n is the number of time periods.\r\n" );
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document.write( "In your problem\r\n" );
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document.write( "time periods are years;\r\n" );
document.write( "p = 3900 dollars;  \r\n" );
document.write( "r = 0.14 per year;\r\n" );
document.write( "n = 4 years.\r\n" );
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document.write( "Formula becomes f =  = 19192.46 dollars (rounded).\r\n" );
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document.write( "Now, the problem asks, what amount A should be deposited one time today\r\n" );
document.write( "on the 4 years account giving 14% interest rate annually and compounded annually,\r\n" );
document.write( "in order for to get the same total of $19192.46 at the end of 4 years?\r\n" );
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document.write( "To determine it, we write this equation for the unknown principal amount A\r\n" );
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document.write( "    19192.46 = .\r\n" );
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document.write( "From this equation we get the ANSWER\r\n" );
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document.write( "    A =  = 11363.48.\r\n" );
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document.write( "So, the present value of this ordinary annuity is  $11363.48.    ANSWER\r\n" );
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\n" ); document.write( "\n" ); document.write( "On Ordinary Annuity saving plans see the lessons\r
\n" ); document.write( "\n" ); document.write( "    - Ordinary Annuity saving plans and geometric progressions\r
\n" ); document.write( "\n" ); document.write( "    - Solved problems on Ordinary Annuity saving plans \r
\n" ); document.write( "\n" ); document.write( "    - Finding present value of an annuity, or an equivalent amount in today's dollars \r
\n" ); document.write( "\n" ); document.write( "in this site.\r
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\n" ); document.write( "\n" ); document.write( "The lessons contain EVERYTHING you need to know about this subject, in clear and compact form.\r
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\n" ); document.write( "\n" ); document.write( "On discretely compounded accounts, see the lessons\r
\n" ); document.write( "\n" ); document.write( "    - Compound interest percentage problems \r
\n" ); document.write( "\n" ); document.write( "    - Problems on discretely compound accounts \r
\n" ); document.write( "\n" ); document.write( "in this site.\r
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