Use the table for the question(s)below.
Suppose the term structure of interest rates is shown below:
-The present value of receiving $1000 per year with certainty at the end of the next three years is closest to:
A)$2737.
B)$2723.
C)$2733.
D)$2744.

Question

Use the table for the question(s)below.
Suppose the term structure of interest rates is shown below: 
-The present value of receiving $1000 per year with certainty at the end of the next three years is closest to:
A)$2737. 
B)$2723. 
C)$2733. 
D)$2744.

Quizplus · Accepted Answer

The present value of an annuity can be calculated using the formula for the present value of an annuity. Assuming a discount rate of 5%, the present value of receiving $1000 per year for three years is approximately $2737.

Use the Table for the Question(s)below