Assuming an interest rate of 10%, the present value of $8000 received at the end of each year for 5 years would be closest to: Present Value of $1
Present Value of Annuity of $1

Question

Assuming an interest rate of 10%, the present value of $8000 received at the end of each year for 5 years would be closest to: Present Value of $1
 Present Value of Annuity of $1

Quizplus · Accepted Answer

We can use the formula for the present value of an annuity: 
PV = PMT × ((1 − (1 / (1 + r)^n)) / r)
where PMT is the payment amount, r is the interest rate, and n is the number of periods.
Plugging in the values, we get:
PV = 8000 × ((1 − (1 / (1 + 0.1)^5)) / 0.1) = $30,328 (rounded to the nearest dollar). Therefore, the correct answer is choice C.

Assuming an Interest Rate of 10%, the Present Value of $8000