SOLUTION: Find the present value of the following ordinary annuity. Monthly payments of $274.14, 48 months, 12% compounded monthly.

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Question 259978: Find the present value of the following ordinary annuity.
Monthly payments of $274.14, 48 months, 12% compounded monthly.
Answer by nerdybill(7384) About Me  (Show Source):
You can put this solution on YOUR website!
Find the present value of the following ordinary annuity.
Monthly payments of $274.14, 48 months, 12% compounded monthly.
.
PV = PMT [(1 - (1 / (1 + i)^n)) / i]
PV is present value
PMT is the payments
i is the interest rate
n is number of payments
.
PV = PMT [(1 - (1 / (1 + i)^n)) / i]
PV = 274.14 [(1 - (1 / (1 + .12)^48)) / .12]
PV = 274.14 [(1 - (1 / (1.12)^48)) / .12]
PV = 274.14 [(1 - 1/230.39) / .12]
PV = 274.14 [(1 - 0.0043)/ .12]
PV = 274.14 [0.9957/ .12]
PV = 274.14 [8.2972]
PV = $2274.58