What is the value today of receiving $3,000 at the end of each year for the next three years,assuming an interest rate of 3% compounded annually?

Question

Quizplus · Accepted Answer

The present value of an annuity is the sum of the present values of each individual payment. The present value of each payment is calculated by dividing the payment by (1 + r)^n, where r is the interest rate and n is the number of years from the payment to the present. In this case, the present value of each payment is $3,000 / (1 + 0.03)^n, where n is 1, 2, or 3. The present value of the annuity is the sum of these three present values, which is $8,486.

What Is the Value Today of Receiving $3,000 at the End