The formula for the present value of an ordinary annuity is :
[tex]P=PMT\times\frac{1-\frac{1}{(1+r)^n}}{r}[/tex]
where P = present value
PMT = annuity payments
r = interest rate
n = number of period in which payments will be made
From the problem, we have :
PMT = $1000
r = 6% or 0.06
n = 8
Using the formula above :
[tex]\begin{gathered} P=1000\times\frac{1-\frac{1}{(1+0.06)^8}}{0.06} \\ P=6209.79 \end{gathered}[/tex]
The answer is $6,209.79
