Brooks Company will receive $10,000 a year at the end of each of the next five years.Using a discount rate of 14%,the present value of the receipts can be stated as ________.

Question

Quizplus · Accepted Answer

The present value of an ordinary annuity due can be found using the Ordinary Annuity PV factor, which takes into account the fact that each payment is made at the end of the year. Therefore, Choice C is the best option. Choices A and D are incorrect because they use the Ordinary Annuity FV factor and FV factor, respectively, which are not appropriate for finding present value. Choice B is incorrect because it uses the PV factor, which does not take into account the fact that payments are made annually.

Brooks Company Will Receive $10,000 a Year at the End