Finding the discounted current value of $1,000 to be received at the end of each of the next 5 years requires calculating the ____.
A) future value of an annuity
B) future value of an annuity due
C) present value of an annuity
D) present value of an annuity due

Question

Quizplus · Accepted Answer

To find the discounted current value of a series of future payments, we need to calculate the present value of an annuity. An annuity involves a fixed payment over a period of time, which is exactly what we have in this scenario. The present value of an annuity formula takes into account the time value of money and discounting the cash flows back to the present. Therefore, choice (C) is the correct answer.

Finding the Discounted Current Value of $1,000 to Be Received