Use the data in table 3.1 to answer the following question(s):
Table 3.1
-Refer to Table 3.1 above. How much will you need to deposit today to enable you to withdraw $1,000 each year for the next 5 years if the money is invested at 7%?
A) $1,403
B) $713
C) $5,751
D) $4,100

Question

Use the data in table 3.1 to answer the following question(s):
  Table 3.1
-Refer to Table 3.1 above. How much will you need to deposit today to enable you to withdraw $1,000 each year for the next 5 years if the money is invested at 7%?
A) $1,403 
B) $713 
C) $5,751 
D) $4,100

Quizplus · Accepted Answer

To find the present value of an annuity, you use the formula for the present value of an annuity: PV = PMT × [(1 - (1 + r)^-n) / r]. Here, PMT = $1,000, r = 0.07, and n = 5. Calculating this gives approximately $4,100.

Use the Data in Table 3