The furniture store offers you no-money-down on a new set of living room furniture.Further,you may pay for the furniture in three equal annual end-of-the-year payments of $750 each with the first payment to be made one year from today.If the discount rate is 5%,what is the present value of the furniture payments?
A)$2,042.44
B)$2,214.27
C)$2,333.39
D)$2,673.01

Question

Quizplus · Accepted Answer

The present value of the furniture payments is $2,042.44. This is calculated by multiplying the annual payment of $750 by the present value factor for an annuity of 3 years at 5%, which is 2.72325.

The Furniture Store Offers You No-Money-Down on a New Set