The pv of an ordinary annuity with 10 payments e. $59,547.24.
The required details about annuity is mentioned in below paragraph.
Annuities, a long-term investment offered by an insurance company, are designed to reduce the likelihood that you would outlive your income. Your purchase payments (what you give) are transformed into recurring payments that may last a lifetime through annuitization. A contract for insurance known as an annuity is one in which you and a provider firm agree to buy a stream of payments to yourself over time in order to guard against outliving your income.
Annuity's present value is equal to C*[1-(1+i)n]/i].
Where,
C = Periodic Cash Flow
I = periodical interest rate
Number of periods, n
= $7900[ 1-(1+0.055)^-10 /0.055] .055]
= $7900[ 1-(1.055)^-10 /0.055] .055]
= $7900[ (0.4146) ] /0.055
= $59,547.24
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