Assuming an interest rate of 10%,the present value of $12,000 received at the end of each year for 6 years would be closest to:

Question

Quizplus · Accepted Answer

We can use the formula for present value of an annuity:

PV = PMT x [(1 - (1+r)^-n)/r]

where PV is the present value, PMT is the amount received at the end of each year, r is the interest rate per period (in this case, per year), and n is the number of periods (in this case, 6 years).

Plugging in the values we have:

PV = $12,000 x [(1 - (1+0.1)^-6)/0.1]
PV = $12,000 x [(1 - 0.564474)/0.1]
PV = $12,000 x [9.592677]
PV = $115,112.11

Therefore, the present value of $12,000 received at the end of each year for 6 years at an interest rate of 10% is approximately $52,260.

Assuming an Interest Rate of 10%,the Present Value of $12,000