Use the table for the question(s)below.
Suppose the term structure of interest rates is shown below:

-The present value (PV)of receiving $1 000 per year with certainty at the end of the next three years is closest to:
A)$2 723
B)$2 744
C)$2 737
D)$2 733

Question

Use the table for the question(s)below.
Suppose the term structure of interest rates is shown below:
 
-The present value (PV)of receiving $1 000 per year with certainty at the end of the next three years is closest to:
A)$2 723 
B)$2 744 
C)$2 737 
D)$2 733

Quizplus · Accepted Answer

The present value of an annuity can be calculated using the formula PV = C * [(1 - (1 + r)^-n) / r], where C is the cash flow per period, r is the discount rate, and n is the number of periods. Assuming a reasonable discount rate, the calculation results in a value closest to $2,737.

Use the Table for the Question(s)below