Use this information to answer the following question.

-What amount must be deposited today so that $1,200 may be withdrawn at the end of each year for three years,assuming an APR of 7 percent?
A)$2,169.60
B)$3,148.80
C)$3,366.00
D)$3,850.28

Question

Use this information to answer the following question.

-What amount must be deposited today so that $1,200 may be withdrawn at the end of each year for three years,assuming an APR of 7 percent?
A)$2,169.60 
B)$3,148.80 
C)$3,366.00 
D)$3,850.28

Quizplus · Accepted Answer

To find the present value of an annuity, we use the formula: PV = PMT × [(1 - (1 + r)^-n) / r], where PMT is the annual payment ($1,200), r is the annual interest rate (0.07), and n is the number of years (3). Plugging in the values, we get PV = $1,200 × [(1 - (1 + 0.07)^-3) / 0.07] = $3,148.80.

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