If the appropriate interest rate is 8%,then present value of $500 paid at the beginning of each of the next 40 years is closest to:
A) $23
B) $5,962
C) $6,439
D) $20,0000

Name: If the appropriate interest rate is 8%,then present value of $500 paid at the beginning of each of the next 40 years is closest to: A) $23 B) $5,962 C) $6,439 D) $20,0000
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Quizplus · Accepted Answer

C) PVAdue = PMT[1/i - 1/(i(1+i)ⁿ)](1+i) = 500[1/.08 - 1/(.08(1.08)⁴⁰)](1.08) = 6,439.29

If the Appropriate Interest Rate Is 8%,then Present Value of $500