00:01
Let's find the present value of an ordinary annuity given these two situations.
00:05
We have our payment, which in these cases is going to be 150, and this one would be also 150.
00:13
So then we're going to have our interest rate, which in this case is going to be 10 % apr, but we want to put that over 12 to make it annual, i mean monthly.
00:25
Same thing here.
00:26
We want to put that as 0 .05 over 12.
00:28
So in this case, we're going to have these values as our values of r.
00:33
And then the number of payments is going to be, or n is your number of payments.
00:39
So in this case, we're looking at 24, and in this case, we're looking at 18.
00:43
So now we just plug into the formula and use our calculator to get the answer.
00:49
So the present value is going to be 150 times 1 minus 1 plus 0 .10 over 12 to the negative 24...