SOLUTION: PLEASE EXPLAIN Find the present value of an ordinary annuity of $500 payments each made quarterly over 6 years and earning interest at 8% per year compounded quarterly. ​

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Question 1053997: PLEASE EXPLAIN
Find the present value of an ordinary annuity of $500 payments each made quarterly over 6 years and earning interest at 8% per year compounded quarterly.
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a. $9,456.96
b. $2,311.44
c. $24,968.07
d. $5,264.38
Answer by Theo(13342) About Me  (Show Source):
You can put this solution on YOUR website!
the present value is 9456.96.

the formula you want is the present value of an annuity with end of period payments.

that formula can be found here:

https://www.algebra.com/algebra/homework/Finance/THEO-2016-04-29.lesson#f5

if you'd rather use a calculator, that can be found here.

http://arachnoid.com/finance/index.html

in this calculator, you enter the following:

present value = 0
future value = 0
number of periods= 24
payment amount = -500
interest rate percent per period = 2
payment at end

then click on pv and it will tell you that the present value is 9,456.96

a picture of my inputs and the outputs from the calculator are shown below:

$$$