(Ignore income taxes in this problem.) How much would you have to invest today in the bank at an interest rate of 13% to have an annuity of $3,900 per year for 5 years, with nothing left in the bank at the end of the 5 years? Select the amount below that is closest to your answer.
A) $19,500
B) $17,257
C) $2,118
D) $13,716

Question

Quizplus · Accepted Answer

To find the present value of an annuity, use the formula: PV = PMT × [(1 - (1 + r)^-n) / r]. Here, PMT = $3,900, r = 0.13, and n = 5. Calculating gives a present value closest to $13,716.

(Ignore Income Taxes in This Problem