Concept explainers
Payment or receipt of equal amounts of money per period for a specified amount of time is known as a(n) ____ (12-1)
To fill: The blank given in the statement “Payment or receipt of equal amounts of money per period for a specified amount of time is known as __________.”
Answer to Problem 1CR
Solution:
Payment or receipt of equal amounts of money per period for a specified amount of time is known as Annuity.
Explanation of Solution
Payment or receipt of equal amounts of money per period for a specified amount of time is known as Annuity.
The formula to compute the present value of annuity due is,
Where, PV is the future value, Pmt is the Annuity payment, i is the interest rate per period, n is the number of periods.
For example:
Consider that Annuity payment amount is
The rate period is
The number of periods is
Substitute
Hence, present value of annuity due is
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Chapter 12 Solutions
Contemporary Mathematics for Business & Consumers
- Algebra & Trigonometry with Analytic GeometryAlgebraISBN:9781133382119Author:SwokowskiPublisher:CengageCollege Algebra (MindTap Course List)AlgebraISBN:9781305652231Author:R. David Gustafson, Jeff HughesPublisher:Cengage Learning