SOLUTION: Calculate the present value of the annuity. (Round your answer to the nearest cent.) $1600 monthly at 6.2% for 30 years.

Algebra ->  Finance -> SOLUTION: Calculate the present value of the annuity. (Round your answer to the nearest cent.) $1600 monthly at 6.2% for 30 years.      Log On


   

Question 1191769: Calculate the present value of the annuity. (Round your answer to the nearest cent.)
$1600 monthly at 6.2% for 30 years.
Answer by Theo(13342) About Me  (Show Source):
You can put this solution on YOUR website!
when compounded monthly, the present value of the annuity at 6.2% per year for 30 years is equal to 21,560.32646.

i used the financial calculator at https://arachnoid.com/finance/index.html

my inputs were:
pv = 0
fv = 0
np = 30 * 12 = 360 months
pmt = -1600 per month
ir = 6.2% / 12 = .516666666.....% per month
payment at end of each time period

my output was:
pv = 261,237.72

the online calculator rounds the answer to the nearest penny.

here's a display of the inputs (first display) and output (second display)





the assumption in this calculation was that the interest rate is compounded monthly, since the payments were being made monthly.
that is normally the case with these types of problems.