At a 0% interest the present value factor for an annuity is equal to the number of payments in the annuity.

Question

Quizplus · Accepted Answer

At 0% interest, there is no discounting of future cash flows, so the present value of each payment is equal to its future value. Therefore, the present value of the annuity is simply the sum of its future payments, which is equal to the number of payments in the annuity. Thus, the present value factor for an annuity is equal to the number of payments in the annuity at 0% interest.

At a 0% Interest the Present Value Factor for an Annuity