The factor for the present value of an annuity for 6 years at 10% is 4.3553.This means that an annuity of six $2,000 payments at 10% is the equivalent of $8,710.60 today.

Question

Quizplus · Accepted Answer

The present value of an annuity formula is:

PV = Payment x Present value factor

We are given that the present value factor for 6 years at 10% is 4.3553.

To find the present value of an annuity of six $2,000 payments, we can plug in the given values:

PV = $2,000 x 4.3553

PV = $8,710.60

Therefore, the statement "an annuity of six $2,000 payments at 10% is the equivalent of $8,710.60 today" is true.

The Factor for the Present Value of an Annuity for 6