When using a present value of an annuity table:
A)payments are assumed to be made at the beginning of each period.
B)PVFA factors decrease with an increase in the interest rate.
C)PVFA factors increase with an increase in the number of periods.
D)b and c only

Question

Quizplus · Accepted Answer

Option B is correct because as the interest rate increases, the present value of the annuity decreases, resulting in a decrease in the PVFA factor. Option C is also correct because as the number of periods increases, the present value of the annuity increases, resulting in an increase in the PVFA factor. Option A is incorrect because it depends on whether the payments are assumed to be made at the beginning of each period or at the end of each period, but the question does not specify which one is being used.

When Using a Present Value of an Annuity Table