The factor for the present value of an ordinary annuity for 10% and eight periods is less than ________.
A)the factor for the present value of an ordinary annuity for 8% and eight periods
B)the factor for the present value of an annuity due for 10% and eight periods
C)the factor for the present value of an ordinary annuity for 12% and eight periods
D)the factor for the present value of an ordinary annuity for 10% and ten periods

Question

Quizplus · Accepted Answer

The present value factor for an ordinary annuity decreases as the interest rate increases, so the factor for 10% will be less than the factor for 8%. The other options are not necessarily true, as changing the interest rate or number of periods will affect the factor differently.

The Factor for the Present Value of an Ordinary Annuity