Question

The present value of an annuity of $5,000 to be received at the
beginning of each of the 6 years at a discount rate of 4% would
be:

$26,210 |

$27,258 |

$3,950 |

none of the above |

Answer #1

PV of Annuity = PV of Cfs from it.

Year |
CF |
PVF @4% |
Disc CF |

1 | $ 5,000.00 | 1.0000 | $ 5,000.00 |

2 | $ 5,000.00 | 0.9615 | $ 4,807.69 |

3 | $ 5,000.00 | 0.9246 | $ 4,622.78 |

4 | $ 5,000.00 | 0.8890 | $ 4,444.98 |

5 | $ 5,000.00 | 0.8548 | $ 4,274.02 |

6 | $ 5,000.00 | 0.8219 | $ 4,109.64 |

PV of
Annuity |
$27,259.11 |

OPtion B is correct

Pls do rate, if the answer is correct and comment, if any further assistance is required

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