The present value of an annuity that pays $100 each year indefinitely is $2,000 if the interest rate is 5 percent.

Name: The present value of an annuity that pays $100 each year indefinitely is $2,000 if the interest rate is 5 percent.
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Quizplus · Accepted Answer

The present value of an annuity that pays $100 each year indefinitely can be calculated by dividing the annual payment by the interest rate. In this case, $100 divided by 0.05 (5 percent expressed as a decimal) is $2,000. Therefore, the statement is true.

The Present Value of an Annuity That Pays $100 Each