Marshall has received an inheritance and wants to invest a sum of money today that will yield $5,000 at the end of each of the next 10 years. Assuming he can earn an interest rate of 5% compounded annually, how much of his inheritance must he invest today? (^PV^of^$1, ^FV^of^$1, ^PVA^of^$1, and ^FVA^of^$1) (Use appropriate factor(s) from the tables provided.) A) $45,125.00 B) $100,000.00 C) $47,500.00 D) $38,608.50 E) $50,000.00

Question

Quizplus · Accepted Answer

To find the present value of an annuity, use the Present Value Annuity (PVA) factor for 10 years at 5%. Multiply this factor by the annual payment of $5,000. The correct calculation results in approximately $38,608.50.

Marshall Has Received an Inheritance and Wants to Invest a Sum