Jon Shear expects an investment of $25,000 to return $6,595 annually.His investment is earning 10% per year.How many annual payments will he receive?
A)Five payments
B)Six payments
C)Four payments
D)Three payments
E)More than six payments

Question

Quizplus · Accepted Answer

Present Value of an Annuity = Annuity * Interest Factor
$25,000 = $6,595 * Interest Factor; Interest Factor = 0.3.7908
3.7908 is the interest factor on the Present Value of an Annuity table; i = 10%; n = 5

Jon Shear Expects an Investment of $25,000 to Return $6,595