To solve, apply the formula of present value of annuity.
`PV= (PMT[1-(1+r/n)^(-nt)])/(r/n)`
where
PV is the present value
PMT is the periodic payment
r is the rate
n is the number of deposits/withdrawals in a year, and
t is the number of years.
Since $1530 per quarter is to be withdrawn for 25 years, then PMT=1530, n=4 and t=25. And the given rate is s r=6%.
Plugging them to the formula yields:
`PV=(1530*[1-(1+0.06/4)^(-4*25)])/(0.06/4)`
`PV =...
To solve, apply the formula of present value of annuity.
`PV= (PMT[1-(1+r/n)^(-nt)])/(r/n)`
where
PV is the present value
PMT is the periodic payment
r is the rate
n is the number of deposits/withdrawals in a year, and
t is the number of years.
Since $1530 per quarter is to be withdrawn for 25 years, then PMT=1530, n=4 and t=25. And the given rate is s r=6%.
Plugging them to the formula yields:
`PV=(1530*[1-(1+0.06/4)^(-4*25)])/(0.06/4)`
`PV = (1530(1-1.015^(-100)))/0.015`
`PV = 78985.79661`
Rounding off to nearest hundredths, it becomes 78985.80.
Therefore, the present value is $78985.80 .
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