Chapter 13.4, Problem 12E

### Algebra and Trigonometry (MindTap ...

4th Edition
James Stewart + 2 others
ISBN: 9781305071742

Chapter
Section

### Algebra and Trigonometry (MindTap ...

4th Edition
James Stewart + 2 others
ISBN: 9781305071742
Textbook Problem

# APPLICATIONSAnnuity What is the present value of an annuity that consists of 30 monthly payments of $300 at an interest rate of 8 % per year, compounded monthly? To determine To find: The present value of an annuity consisting of 30 monthly payments of$300 at an interest rate of 8% per year, compounded monthly.

Explanation

Given:

The interest per year is,

i=8%

Number of monthly payments is,

n=30

The payment R is,

R=\$300

Approach:

The present value Ap of an annuity consisting of n regular payments of size R and interest rate

i per time period is given by,

Ap=R1(1+i)ni ... (1)

Calculation:

The interest per year compounded monthly is given by,

i=0

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