Question

You are calculating the present value of​ $5,000 that you will receive at the end of every year for the next ten years. Which table will you use to obtain the present value factor to calculate the total present value of those​ $5,000 payments you will be​ receiving?

A. Future Value of Ordinary Annuity of​ $1

B. Present Value of Ordinary Annuity of​ $1

C. Present Value of​ $1 table

D. Future Value of​ $1 table

Answer 1

ANSWER ;- B

In the contracts to the future value calculations,a present value(PV) calculations tells us how much money would be required now to produce a series of payments in the future,againassuming a set of interest rate.

PV ordinary annuity=C x [1-(1+i) -n}/i

Here -n is in the form of power.

Plugging the same number as above into the equations,here as

PV Ordinary annuity =$5000x[1-(1+0.10)-10]/0.10