Question

What single cash payment made now is equivalent to 11 years of payments of $4800 made at the end of every 6 months with interest at 4.4% compounded quarterly?

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Answer to a math question What single cash payment made now is equivalent to 11 years of payments of $4800 made at the end of every 6 months with interest at 4.4% compounded quarterly?

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Velda
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109 Answers
We can use the concept of present value to find the equivalent single cash payment made now.

Given:
- Payment amount (PMT) = $4800
- Number of years (n) = 11
- Interest rate (r) = 4.4% = 0.044
- Compounded quarterly, so quarterly interest rate (i) = 0.044/4 = 0.011

We need to find the equivalent single cash payment now, which is the present value (PV) of the series of payments.

The formula for present value of an ordinary annuity is:
PV = PMT \times \dfrac{1 - (1 + i)^{-n}}{i}

Plugging in the values:
PV = 4800 \times \dfrac{1 - (1 + 0.011)^{-22}}{0.011}


PV=4800\times19.446
PV\approx\$93340.72

Therefore, the single cash payment made now that is equivalent to 11 years of payments of \ \$93340.72 .

\boxed{PV\approx\$93340.72}

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