An annuity pays $12 per year for 100 years.What is the present value (PV)of this annuity given that the discount rate is 8%?

Question

Quizplus · Accepted Answer

We can use the formula: PV = C * ((1 - (1+r)^-n) / r), where PV is the present value, C is the annual payment, r is the discount rate, and n is the number of years.

Plugging in the values, we get:

PV = 12 * ((1 - (1+0.08)^-100) / 0.08)
PV = $149.93

Therefore, the present value of the annuity is $149.93, which is closest to option C ($149.93).

An Annuity Pays $12 Per Year for 100 Years