You are to receive an annuity of $1,000 per year for 10 years.You will receive the first payment two years from today.At a discount rate of 10%,what is the present value of this annuity?
A) $5,078.15
B) $5,585.97
C) $6,144.57
D) $6,759.03

Question

Quizplus · Accepted Answer

The PV = $6,144.57.But the first payment is received in two years,not one year,so discount the PV by one more year: 6,144.57/1.1 = $5,585.97
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You Are to Receive an Annuity of $1,000 Per Year