To calculate the present value of four annual installments of $1,000 at an 8% interest rate beginning on January 1, 2016 and payments due on December 31 of each year, one would use the present value of an ordinary annuity table.

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Quizplus · Accepted Answer

The payments are made at the end of each period, which aligns with the definition of an ordinary annuity. Therefore, to calculate the present value of these payments, one would indeed use the present value of an ordinary annuity table.

To Calculate the Present Value of Four Annual Installments of $1,000