   Chapter 12, Problem 15AT ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

#### Solutions

Chapter
Section ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447
Textbook Problem

# Solve the following exercises by using tables.What amount must be deposited now to withdraw $200 at the beginning of each month for 3 years if interest is 12% compounded monthly? To determine To calculate: The present value of annuities due where annuity payment is$200, frequency of payment is 1 month, time duration is 3 years, nominal rate of return is 12% and interest is compounded monthly.

Explanation

Given Information:

Annuity payment is $200, frequency of payment is 1 month, time duration is 3 years, nominal rate of return is 12% and interest is compounded monthly. Formula used: The formula to compute the present value of annuity due is, Present Value=Annuity due table factor×Annuity payment Annuity due table factor=Ordinary annuity table factor+1.00000 Calculation: Consider that annuity payment is$200, frequency of payment is 1 month, time duration is 3 years, nominal rate of return is 12% and interest is compounded monthly.

The rate period is 1%(12%÷12 period per year).

The number of periods is 35(3 years×12 period per year-1)

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