If the future value annuity factor at 10% and 5 years is 6.1051, calculate the equivalent present value annuity factor
A) 6.1051
B) 3.7908
C) 6.7156
D) None of the given ones

Question

Quizplus · Accepted Answer

The present value annuity factor is the inverse of the future value annuity factor. Therefore, the equivalent present value annuity factor at 10% and 5 years would be 1/6.1051 which is approximately equal to 0.1639. However, the answer choices are rounded, so we should round our answer to the nearest ten-thousandth, which gives us 0.1639 rounded to 4 decimal places. The closest answer choice is B, which is 3.7908 rounded to 4 decimal places, so the correct answer is B.

If the Future Value Annuity Factor at 10% and 5