Chapter M, Problem 19GI

### Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

Chapter
Section

### Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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# How do you compute the present value of an ordinary annuity?

To determine

Show the way in which the present value of an ordinary annuity can be computed.

Explanation

Present Value: The value of today’s amount expected to be paid or received in the future at a compound interest rate is called as present value.

Present value of an ordinary annuity of $1 represents the present value of a series of future payments of$1 at the end of the each period.

Present value of an ordinary annuity can be computed from the following formula:

PVO=C×[11(1+i)ni]

(or),

Present value of an ordinary annu

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