Answer:
PV= $9.40
Explanation:
Giving the following information:
Annual payment= $1
Interest rate= 6.5%
Number of periods= 15 years
First, we need to calculate the future value using the following formula:
FV= {A*[(1+i)^n-1]}/i
A= annual payment
FV= {1*[(1.065^15) - 1]} / 0.065
FV= $24.18
Now, the present value:
PV= FV/(1+i)^n
PV= 24.18 / 1.065^15
PV= $9.40
