What is the Present Value of a 4 year $400 ordinary annuity at 10 percent? A....

Question

Question

What is the Present Value of a 4 year $400 ordinary annuity at 10 percent?

A. 2,049.31

B. 1,667.95

C. 1,267.95

D. 800.24

E. 800.22

Please show your work!

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Answer 1

Answer #1

Present value of annuity=Annuity[1-(1+interest rate)^-time period]/rate

=400[1-(1.1)^-4]/0.1

=400*3.16986545

=$1,267.95(Approx).

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Answer 2

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