What is the present value of a stream of annual end-of-the-year annuity cash flows if the discount rate is 0%,and the cash flows of $50 last for 25 years?
A)Less than $1,000
B)Exactly $1,250
C)Exactly $1,000
D)This question cannot be answered because we have an interest rate of 0.0%.

Question

Quizplus · Accepted Answer

At a 0% discount rate, the present value of the annuity is simply the sum of the cash flows, which is $50 per year for 25 years, totaling $1,250.

What Is the Present Value of a Stream of Annual