Given that a future value annuity of 8,000 is accrued at 9% compounded annually, the present value of the annuity is evaluated as
[tex]\begin{gathered} PV=P(\frac{1-(1+r)^{-n}}{r})\text{ ----- equation 1} \\ \text{where } \\ PV\text{ }\Rightarrow present\text{ value of the annuity} \\ P\Rightarrow value\text{ of each payment} \\ r\Rightarrow interest\text{ rate} \\ n\Rightarrow period \end{gathered}[/tex]Thus,
[tex]\begin{gathered} P=8,000 \\ r=9\text{\%}=\frac{9}{100}=0.09 \\ n=5 \\ PV\text{ is unknown} \\ \end{gathered}[/tex]Substitute the above value into equation 1, to solve for PV
[tex]\begin{gathered} PV\text{ = 8000(}\frac{1-(1+0.09)^{-5}}{0.09}) \\ \Rightarrow8000\times\frac{1-1.09^{-5}}{0.09} \\ =31117.21 \end{gathered}[/tex]Hence, the sum to be invested is 31117.21
