The present value of $7,500 to be received each year for five years and earning an 10 percent return (rounded) is

Question

Quizplus · Accepted Answer

The present value of an annuity can be calculated using the formula PV = P * [(1 - (1 + r)^-n) / r], where P is the payment per period, r is the interest rate per period, and n is the number of periods. Plugging in the values (P = $7,500, r = 10% or 0.10, and n = 5 years), we find the present value to be approximately $28,433.

The Present Value of $7,500 to Be Received Each Year