An investment today of $8,424 at 6% will yield $2,000 per year for the next five years because interest is being earned on principal that is left invested each year.The following tables are available:
Present value of $1:
Present value of ordinary annuity of $1:

Question

An investment today of $8,424 at 6% will yield $2,000 per year for the next five years because interest is being earned on principal that is left invested each year.The following tables are available:
Present value of $1:
  Present value of ordinary annuity of $1:

Quizplus · Accepted Answer

This is a case of an ordinary annuity, where the same amount is received at the end of each year for a fixed number of years. The present value of an ordinary annuity of $1 can be calculated using the table provided. In this case, the annuity is $2,000 per year for 5 years, and the present value factor at 6% is 4.212. Therefore, the present value of the annuity is $8,424, which is the same as the initial investment. This means that the investment will yield $2,000 per year for the next five years.

An Investment Today of $8,424 at 6% Will Yield $2,000