QuestionMay 30, 2025

The sum of the present values in Requirement 1 square the present value calculated with the Present Value of Ordinary Annuity of 1 table

The sum of the present values in Requirement 1 square the present value calculated with the Present Value of Ordinary Annuity of 1 table
The sum of the present values in Requirement 1 square  the present value calculated with the Present Value of
Ordinary Annuity of 1 table

Solution
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Answer

The sum of the present values in Requirement 1 equals the present value calculated with the Present Value of Ordinary Annuity of \1 table. Explanation 1. Identify the Present Value Formula Use the formula for the present value of an ordinary annuity: PV = PMT \times \left(\frac{1 - (1 + r)^{-n}}{r}\right). 2. Calculate Present Value Using Table Find the factor from the Present Value of Ordinary Annuity table for given interest rate and number of periods, then multiply by payment amount. 3. Compare Values Compare the sum of individual present values with the calculated present value using the table factor.

Explanation

1. Identify the Present Value Formula<br /> Use the formula for the present value of an ordinary annuity: $PV = PMT \times \left(\frac{1 - (1 + r)^{-n}}{r}\right)$.<br /><br />2. Calculate Present Value Using Table<br /> Find the factor from the Present Value of Ordinary Annuity table for given interest rate and number of periods, then multiply by payment amount.<br /><br />3. Compare Values<br /> Compare the sum of individual present values with the calculated present value using the table factor.
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