If C = $1000 and r = 5% (semi- annual), then the price (P) of a two- year annuity is:
A) $3523.94.
B) $3941.00.
C) $3322.76.
D) $3761.97.

Question

Quizplus · Accepted Answer

The price of a two-year annuity can be calculated using the formula for the present value of an annuity. With semi-annual compounding, the rate is 2.5% per period, and there are 4 periods. Using these values, the correct price is $3761.97.

If C = $1000 and R = 5% (Semi- Annual)