If the present annuity factor is 3.8896, what is the present value annuity factor for an equivalent annuity due if the interest rate is 9%?
A) 3.5684
B) 4.2397
C) 3.8896
D) None of the above.

Question

Quizplus · Accepted Answer

The present value annuity factor for an annuity due is simply the present value annuity factor multiplied by (1+i), where i is the interest rate per period. In this case, the interest rate is 9%, or 0.09 per period. Therefore, the present value annuity factor for an equivalent annuity due would be:

3.8896 x (1+0.09) = 4.2397

Therefore, the correct answer is B: 4.2397.

If the Present Annuity Factor Is 3