Examples for Present Value of an Ordinary Annuity

[@bradcasper4823]

To be more accurate, the answer should be 10833.25

[@petrusshangadi8694]

I don't think that present value answer is correct.😢 Isn't it supposed to be $10833.24😟?

[@petrusshangadi8694]

I mean $ 10833.25

[@DigEmT]

shouldn't the answer be 10833.25 and not 10883.25?

[@marcjustincutamora5336]

DigEmT i also got 10833.25

[@jamesclarito1140]

Same

[@amaar3619]

I don't understand why you converted the monthly rate into a yearly rate and then converted the number of years into number of months. Could you please explain this

[@michaelfulkerson2486]

Since the payments are made monthly (and the interest is compounded monthly), that's the way you have to do it. Remember that "i" is NOT the interest rate, it's the interest rate *per period*. And n is NOT the number of years, it's the number of compounding periods (or the number of payments, which is the same thing).

[@amaar3619]

@@michaelfulkerson2486 I revised annuities again and I finally understood what you did haha. I got 10,833 which is the same as what you wrote in the video description. Yay!

[@jaredsherman2774]

How do you know if you need to do the power to the -n or the positive n.

[@michaelfulkerson2486]

For the formula in this video, it's to the power of -n. That's just the way the formula works in this case. Remember, though, what it means to raise something to a negative power: for example, 5^(-3) is the same as 1/(5^3) = 1/125.

[@wendel712]

10833.25

[@michaelfulkerson2486]

Thank you. Yes, you are correct. A correction can be seen on the screen if you are viewing on a computer (but not on a mobile device).

[@natirahel6411]

Thank u such a help ong

[@trishmodhgil3179]

💛

[@masterjedi487]

the answer you got is wrong but appreciate the work so much

[@umchingiz]

NOW THE CORRECT ANSWER IS 4440,33 USD. IT WAS A MISTAKE TO DIVIDE 4.1% RATE BY 12 SINCE THE FORMULA IS NOT DESIGNED FOR MONTH OR A YEAR RATE PERIOD, I THINK YOU SHOULD DELETE THIS VIDEO

[@michaelfulkerson2486]

No, that's not correct. Since the 4.1% is compounded monthly, the "i" should be .041/12 (you need to divide by 12). I did, however, make a mistake when I entered it into my calculator, and the correct answer at the end should be $10,833.25, which you can see in the description.

[@umchingiz]

@@michaelfulkerson2486 So I should now, deposit 10 833.25 to withdraw each month 200 USD for 5 years, at the rate of 4.1%, the problem is even if you use logic the math does not match, can you please try to calculate this in exsel, monthly basis. my result was this 1 4440,322756 182,053233 4622,375989 200 4422,375989 2 4422,375989 181,3174155 4603,693404 200 4403,693404 3 4403,693404 180,5514296 4584,244834 200 4384,244834 4 4384,244834 179,7540382 4563,998872 200 4363,998872 5 4363,998872 178,9239537 4542,922826 200 4342,922826 6 4342,922826 178,0598358 4520,982661 200 4320,982661 7 4320,982661 177,1602891 4498,14295 200 4298,14295 8 4298,14295 176,223861 4474,366811 200 4274,366811 9 4274,366811 175,2490393 4449,615851 200 4249,615851 10 4249,615851 174,2342499 4423,850101 200 4223,850101 11 4223,850101 173,1778541 4397,027955 200 4197,027955 12 4197,027955 172,0781461 4369,106101 200 4169,106101 13 4169,106101 170,9333501 4340,039451 200 4140,039451 14 4140,039451 169,7416175 4309,781069 200 4109,781069 15 4109,781069 168,5010238 4278,282092 200 4078,282092 16 4078,282092 167,2095658 4245,491658 200 4045,491658 17 4045,491658 165,865158 4211,356816 200 4011,356816 18 4011,356816 164,4656295 4175,822446 200 3975,822446 19 3975,822446 163,0087203 4138,831166 200 3938,831166 20 3938,831166 161,4920778 4100,323244 200 3900,323244 21 3900,323244 159,913253 4060,236497 200 3860,236497 22 3860,236497 158,2696964 4018,506193 200 3818,506193 23 3818,506193 156,5587539 3975,064947 200 3775,064947 24 3775,064947 154,7776628 3929,84261 200 3729,84261 25 3729,84261 152,923547 3882,766157 200 3682,766157 26 3682,766157 150,9934124 3833,759569 200 3633,759569 27 3633,759569 148,9841423 3782,743711 200 3582,743711 28 3582,743711 146,8924922 3729,636204 200 3529,636204 29 3529,636204 144,7150843 3674,351288 200 3474,351288 30 3474,351288 142,4484028 3616,799691 200 3416,799691 31 3416,799691 140,0887873 3556,888478 200 3356,888478 32 3356,888478 137,6324276 3494,520906 200 3294,520906 33 3294,520906 135,0753571 3429,596263 200 3229,596263 34 3229,596263 132,4134468 3362,00971 200 3162,00971 35 3162,00971 129,6423981 3291,652108 200 3091,652108 36 3091,652108 126,7577364 3218,409844 200 3018,409844 37 3018,409844 123,7548036 3142,164648 200 2942,164648 38 2942,164648 120,6287506 3062,793398 200 2862,793398 39 2862,793398 117,3745293 2980,167928 200 2780,167928 40 2780,167928 113,986885 2894,154813 200 2694,154813 41 2694,154813 110,4603473 2804,61516 200 2604,61516 42 2604,61516 106,7892216 2711,404382 200 2511,404382 43 2511,404382 102,9675796 2614,371961 200 2414,371961 44 2414,371961 98,98925041 2513,361212 200 2313,361212 45 2313,361212 94,84780967 2408,209021 200 2208,209021 46 2208,209021 90,53656987 2298,745591 200 2098,745591 47 2098,745591 86,04856924 2184,79416 200 1984,79416 48 1984,79416 81,37656057 2066,170721 200 1866,170721 49 1866,170721 76,51299956 1942,68372 200 1742,68372 50 1742,68372 71,45003254 1814,133753 200 1614,133753 51 1614,133753 66,17948387 1680,313237 200 1480,313237 52 1480,313237 60,69284271 1541,00608 200 1341,00608 53 1341,00608 54,98124926 1395,987329 200 1195,987329 54 1195,987329 49,03548048 1245,022809 200 1045,022809 55 1045,022809 42,84593518 1087,868745 200 887,8687445 56 887,8687445 36,40261853 924,271363 200 724,271363 57 724,271363 29,69512588 753,9664889 200 553,9664889 58 553,9664889 22,71262605 576,679115 200 376,679115 59 376,679115 15,44384371 392,1229587 200 192,1229587 60 192,1229587 7,877041306 200 200 0, please take your time and not using the formula just using the elementary arithmetics try to get (withdraw) 200 USD monthly at the interest rate 4.1% (monthly) depositing 10833$, compounding monthly, please try to calculate, you will see that your math is incorrect, again. if you use the formula as it designed, not dividing the interest rate by 12 you will get 4440,32 USD, and if you deposit this amount based on the abovementioned conditions you will get the correct answer.

[@ereke0051]

@@umchingiz Hey! Are you sure of your answer? I'm just not good enough at math. Thanks in advance.

[@petrusshangadi8694]

I think you were right to divide the 4.1% by 12 months , because it clearly stated that it it was compounded monthly..

[@slavatar333]

10833.25