Connor has $300,000 to invest in a 5-year annuity. Assuming the time value of money is 10%, what amount will Connor receive in cash each year? (PV of $1and PVA of $1) (Use appropriate factor(s) from the tables provided. Round your answer to the nearest dollar.)

Question

Quizplus · Accepted Answer

Using the PV of $1 table, we find the present value of an ordinary annuity of $1 for 5 years at 10% to be 3.791. 
Next, we use the PVA of $1 table to find the annuity payment necessary to accumulate $300,000 over 5 years at 10% to be $79,139. Therefore, Connor will receive $79,139 in cash each year for 5 years.

Connor Has $300,000 to Invest in a 5-Year Annuity