The present value of an ordinary annuity paying $100 for 12 years at an interest rate of 9.25% per annum is:

Question

Quizplus · Accepted Answer

The present value of an ordinary annuity is calculated using the formula:PV = PMT * [1 - (1 + r)^-n] / rwhere:PMT is the payment amountr is the interest rate per periodn is the number of periodsIn this case, PMT = $100, r = 9.25% / 12 = 0.007708, and n = 12. Plugging these values into the formula, we get:PV = $100 * [1 - (1 + 0.007708)^-12] / 0.007708PV = $100 * [1 - 0.567426] / 0.007708PV = $100 * 0.432574 / 0.007708PV = $843.05Therefore, the correct answer is C) $843.05.

The Present Value of an Ordinary Annuity Paying $100 for 12