Even with an interest rate of 0.0%,the future value of a 5-year $800 annual annuity will be greater than the present value of the same annuity.

Question

Quizplus · Accepted Answer

The future value of an annuity considers the compound interest earned on the payments over time. With a 0.0% interest rate, there's no compound interest, so the future value simply equals the sum of the payments made, which does not exceed the present value of those same payments when considering time value of money principles.

Even with an Interest Rate of 0