What is the present value of a semi-annual ordinary annuity payment of $7,000 made for 12 years with a required annual return of 5%?
A . $65,145
B . $128,325
C . $125,195
D . $62,043
What Is The Present Value Of A Semi-annual Ordinary Annuity Payment Of $7,000 Made For 12 Years With A Require
08
Sep
kiki_chr
September 8, 2009 at 8:06 pm
The answer is C, $125,195.
Learning how to calculate the time value of money is a very important skill. At some point you will be looking at an investment or a loan. If you don’t know how to calculate PV or FV you’re going to get screwed. So, I think you should learn instead of asking others to answer your test.
On you financial calculator set the interest rate to 2.5% (b/c it is two payments a year), number of periods 24, payment of $7,000 each time. Then, calculate the Present Value and you should get the answer.