# Find the present value of the ordinary annuity. If the amount of $500 of deposit in an account annually with an interest rate 9% per year for 25 years. glasskerfu 2020-10-23 Answered Find the present value of the ordinary annuity. If the amount of$500 of deposit in an account annually with an interest rate $9\mathrm{%}$ per year for 25 years.
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Laaibah Pitt
The present value of an annuity is calculated by the formula,

Where PV is the present value
PMT is the amount of periodic payment i is the periodic interest rate, $i=\frac{r}{m}$
n is the total number of periods $n=mt$
r is the annual interest rate in decimals m number of compounding period per year.
Step 2
Here,
$PMT=500$
Compounded annually, $m=1$
Thus, the interest rate $i=r=0.09$ in decimals,
And the number of period $n=25$ years.
Substituting these values in the formula of the present value of an annuity,

$=4911.2898$
Rounding to the nearest cent,
$PV=4911.29$ dollars
Therefore, the present value of an annuity is \$ 4911.29.