Find the present value of an ordinary annuity with deposits of 25,000 semiannually for 6 years at 10.8% compounded semiannually

To find the present value (PV) of an ordinary annuity, we can use the present value of an ordinary annuity formula:

\[ PV = P \times \frac{1 - (1 + r)^{-nt}}{r} \]

Where:
- $ P $ is the payment per period
- $ r $ is the interest rate per period
- $ n $ is the number of periods per year
- $ t $ is the total number of years

Given:
- $ P = 25,000 $
- $ t = 6 $ years
- Annual interest rate = 10.8%
- Interest is compounded semiannually, so $ n = 2 $

First, we need to find the interest rate per period $ r $:

\[ r = \frac{10.8\%}{2} = 5.4\% = 0.054

Learn how to calculate the present value (PV) of an ordinary annuity with deposits of $25,000 semiannually for 6 years at an annual interest rate of 10.8% compounded semiannually. This problem involves the time value of money concept and annuities. Suitable for college-level finance and mathematics students.

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