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August 21, 2014

August 21, 2014

Posted by **April** on Saturday, August 3, 2013 at 5:46am.

- Math -
**Reiny**, Saturday, August 3, 2013 at 9:27amWe have two main annuity formulas

1. PV of annuity = payment [ 1 - (1+i)^-n ]/i

and

2. Amount of annutiy = payment [ (1+i)^n - 1 ]/i

both of these assume that the payments are made at the end of each interest period.

So for this question, we have to separate the first payment from the remaining 14.

PV = 5 million + 5million( 1 - 1.09^-14)/.09

= 5 million + 5million( 7.78615...)

= $43,930,751.94

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