A four-year annuity of $1,000 annual payments at the end of each year, with a 10% interest rate is worth how much today?
A)$2,914.67
B)$3,486.85
C)$3,169.87
D)None of the above

Question

Quizplus · Accepted Answer

Using the present value annuity formula, we get: PV = C * ((1 - (1+r)^(-n))/r), where PV is the present value, C is the annual payment, r is the interest rate, and n is the number of years. Plugging in the values, we get: PV = 1000 * ((1 - (1+0.1)^(-4))/0.1) = $3,169.87. So, the best choice is C.

A Four-Year Annuity of $1,000 Annual Payments at the End