Answer:
The correct answer is E.
Explanation:
Giving the following information:
Ordinary annuity with 10 payments of $2,700. The interest rate is 5.5%.
First, we need to calculate the final value using the following formula:
FV= {A*[(1+i)^n-1]}/i
A= annual pay
FV= {2,700*[(1.055^10)-1]}/0.055= $34,763.45
Now, we can calculate the present value:
PV= FV/(1+i)^n
PV= 34,763.45/(1.055^10)= 20,352
