What is the present value of a $300 annuity payment over 5 years if interest rates are 8 percent?
A) $204.17
B) $440.80
C) $1,197.81
D) $1,938.96

Question

Quizplus · Accepted Answer

The present value of an annuity can be calculated using the formula PV = P * [(1 - (1 + r)^-n) / r], where P is the payment amount, r is the interest rate per period, and n is the number of periods. Plugging in the values ($300 for P, 0.08 for r, and 5 for n), the calculation gives a present value of approximately $1,197.81.

What Is the Present Value of a $300 Annuity Payment