00:01
So here we're given that the interest rate, r is going to be 4%, that's 0 .04 per year.
00:07
$1 ,000 is then deposited at the end of each year for 50 years.
00:13
And we're asked to find the present value of these deposits.
00:16
Well, the present value is going to be equal to.
00:19
So c is the payment per year.
00:21
That's going to be 1 ,000 in this case, times 1 minus 1 plus r to the negative end divided by r.
00:30
So r is the interest rate of 4%, and n is the number of period, so n is going to be 50.
00:35
So we're going to first calculate what is 1 plus r to the negative n.
00:39
That's going to be 1 plus 0 .04, so 1 .04.
00:43
So the negative n, so to the negative 50 is approximately 0 .141...