Question
Asked Sep 30, 2019
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If the present value of an ordinary, 6-year annuity is $8,800 and interest rates are 9.5 percent, what’s the present value of the same annuity due? (Round your answer to 2 decimal places.)

PV = $_______.__

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Expert Answer

Step 1

An annuity due is a type of annuity in which payments are made at regular time interval and at the beginning of every period.

Step 2

The present value of the same annuity due is calculated as:

Step 3
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(Present value of the 6 year annuity)x(1+Interest rate) Substituting the values, we get; Present value of annuity due-8800x(1+9.5%) =9636

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