An investor receives $250,000 at the end of each of the next 5 years.What is the present value of her investment,given that the interest rate is 5%?
A)$1,082,369.17
B)$1,250,000
C)$979,407.71
D)$1,332,369.17
E)$1,000,000

Question

Quizplus · Accepted Answer

The present value of an annuity can be calculated using the formula PV = C * [(1 - (1 + r)^-n) / r], where C is the cash flow per period, r is the interest rate, and n is the number of periods. Plugging in the values: PV = $250,000 * [(1 - (1 + 0.05)^-5) / 0.05] = $1,082,369.17.

An Investor Receives $250,000 at the End of Each of the Next