SOLUTION: 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

This saving plan of depositing $3900 annually at the end of each of the following 4 years 
at a yearly interest rate of 14%, compounded annually, is called an ORDINARY ANNUITY plan.


There is a formula to calculate the total amount which the plan generate at the end.


The formula is

    f = ,


f is the future value;
p is the regular payment at the end of each time period (yearly payment in this case);
r is the interest rate per time period;
n is the number of time periods.


In your problem


time periods are years;
p = 3900 dollars;  
r = 0.14 per year;
n = 4 years.


Formula becomes f =  = 19192.46 dollars (rounded).


Now, the problem asks, what amount A should be deposited one time today
on the 4 years account giving 14% interest rate annually and compounded annually,
in order for to get the same total of $19192.46 at the end of 4 years?


To determine it, we write this equation for the unknown principal amount A

    19192.46 = .


From this equation we get the ANSWER

    A =  = 11363.48.


So, the present value of this ordinary annuity is  $11363.48.    ANSWER