Suppose the interest rate is 6% and compounded annually.What is the present discounted value of 6 future annual payments of $150?
A) $634.46
B) $737.60
C) $849.06
D) $900.00

Question

Quizplus · Accepted Answer

The present discounted value (PDV) of future payments can be calculated using the formula for the present value of an annuity: PDV = Pmt * [(1 - (1 + r)^-n) / r], where Pmt is the payment amount, r is the interest rate, and n is the number of periods. Plugging in the values: PDV = 150 * [(1 - (1 + 0.06)^-6) / 0.06] = $737.60.

Suppose the Interest Rate Is 6% and Compounded Annually