Uncle Roscoe, a wealthy relative, has given you a choice of receiving $10,000 today or $3,000 at the end of each year for the next four years. Which table factor(s) should be used to most efficiently determine the "value" of the $3,000 cash-flow stream?
A) Future value of $1.
B) Future value of a $1 annuity.
C) Present value of $1.
D) Present value of a $1 annuity.
E) Both Present value of $1 and Present value of a $1 annuity.

Question

Quizplus · Accepted Answer

To determine the value today of receiving $3,000 at the end of each year for the next four years, you would use the present value of a $1 annuity factor. This factor helps calculate the current worth of a series of future payments.

Uncle Roscoe, a Wealthy Relative, Has Given You a Choice