Tom liquidates an investment, and his proceeds will be received in 8 annual payments of $10,000 each with interest computed at 7%. What is the Present Value of this Annuity?

Question

Quizplus · Accepted Answer

To find the present value of an annuity, we need to use the formula:

Present Value = Payment x ((1 - (1 + interest rate)^(-number of payments)) / interest rate)

Plugging in the values given in the problem, we get:

Present Value = $10,000 x ((1 - (1 + 0.07)^(-8)) / 0.07)
Present Value = $59,713.00

Therefore, the correct answer is B.

Tom Liquidates an Investment, and His Proceeds Will Be Received