What's the present value of a 4-year ordinary annuity of $2,250 per year plus an additional $3,800 at the end of Year 4 if the interest rate is 5%

present value is $11104.38

Explanation:

given data

time = 4 year

annuity = $2250

additional = $3800

rate = 5 %

to find out

present value

solution

to find present value we will apply here formula that is

present value = annuity * annuity factor (5%) + additional * discounting factor ... 1

put here all these value in equation 1

present value = 2250 * 3.5460 + 3800 * 0.8226

present value = 11104.38

so present value is $11104.38