The following figure shows a graph that compares the present values of two ordinary annuities of $800 quarterly as functions of the number of quarters. One annuity is at an annual rate of 6% compounded quarterly, and the other is at an annual rate of 9% compounded quarterly. Use the graph below to estimate the difference between the present values of these annuities for 25 years (100 quarters).
A)$32,000
B)$4,500
C)$30,000
D)$100
E)$9,586

Question

The following figure shows a graph that compares the present values of two ordinary annuities of $800 quarterly as functions of the number of quarters. One annuity is at an annual rate of 6% compounded quarterly, and the other is at an annual rate of 9% compounded quarterly. Use the graph below to estimate the difference between the present values of these annuities for 25 years (100 quarters). ​  ​
A)$32,000 
B)$4,500 
C)$30,000 
D)$100 
E)$9,586

Quizplus · Accepted Answer

From the graph, we can see that the difference in present values between the two annuities is approximately $9,586 after 100 quarters (25 years). This can be found by looking at the vertical distance between the two curves at 100 quarters. Therefore, the answer is E.

The Following Figure Shows a Graph That Compares the Present