The present value of a $1 annuity payable over 25 years at a net discount rate of 3% is $17.41.Consequently,the value of a $1 annuity due payable over 26 years is

Question

Quizplus · Accepted Answer

We can use the formula for calculating the present value of an annuity due:

PV = (1+r) * [(1-(1/(1+r)^n))/r]

where PV is the present value, r is the net discount rate, and n is the number of periods.

Using the given values in the question, we get:

PV = (1+0.03) * [(1-(1/(1+0.03)^26))/0.03] = $18.41

Therefore, the value of a $1 annuity due payable over 26 years is $18.41.

The Present Value of a $1 Annuity Payable Over 25