Finding the discounted value of $1,000 to be received at the end of each of the next five years requires calculating the:
A)future value of an annuity.
B)future value of a deferred annuity.
C)present value of an annuity.
D)present value of a deferred annuity.

Question

Quizplus · Accepted Answer

To find the discounted value of $1,000 to be received at the end of each of the next five years, we need to calculate the present value of an annuity. This involves using a present value formula that takes into account the time value of money (i.e. the fact that money is worth more in the present than in the future due to inflation, interest rates, etc.). Therefore, the correct choice is C, which stands for present value of an annuity.

Finding the Discounted Value of $1,000 to Be Received at the End