Use this information to answer the following question.
-What is the present value of receiving $800 at the end of each year for three years,assuming an APR of 7 percent?
A)$652.80
B)$1,952.40
C)$2,099.20
D)$2,244.00

Question

Use this information to answer the following question.  
-What is the present value of receiving $800 at the end of each year for three years,assuming an APR of 7 percent?
A)$652.80 
B)$1,952.40 
C)$2,099.20 
D)$2,244.00

Quizplus · Accepted Answer

To calculate the present value of receiving $800 at the end of each year for three years, we need to use the formula:

PV = C [1 - (1 + r)^-n] / r

where PV is the present value, C is the cash flow each year, r is the annual interest rate (APR), and n is the number of years.

Plugging in the numbers, we get:

PV = $800 [1 - (1 + 0.07)^-3] / 0.07
PV = $2,099.20

Therefore, the present value of receiving $800 at the end of each year for three years, assuming an APR of 7 percent, is $2,099.20.

The best choice is C.

Use This Information to Answer the Following Question