What is the present value of a four-period annuity of $100 per year that begins 2 years from today if the discount rate is 9%?
A) $297.21
B) $323.86
C) $356.85
D) $388.97

Question

Quizplus · Accepted Answer

We can use the formula for present value of an annuity to solve this problem: PV = C[(1 - (1 + r)^-n)/r], where PV is the present value, C is the annual payment, r is the discount rate, and n is the number of periods. Plugging in the values, we get PV = $100[(1 - (1 + 0.09)^-4)/0.09] = $297.21. Therefore, choice A is the correct answer.

What Is the Present Value of a Four-Period Annuity of $100