On January 1, 2009, you are considering making an investment that will pay three annual payments of $10,000. The first payment is not expected until December 31, 2011. You are eager to earn 3%. What is the present value of the investment on January 1, 2009?
A)$26,662.
B)$27,462.
C)$28,286.
D)$29,135.PVA = $10,000 x ( 4.57971* - 1.91347**) = $26,662 *PVA of $1: n=5; i=3% **PVA of $1: n=2; i=3%

Question

Quizplus · Accepted Answer

To calculate present value, we need to use the formula: PV = PMT x (1 - 1/(1+r)^n) / r
Plugging in the given values, we get: PV = $10,000 x (1 - 1/(1+0.03)^3) / 0.03
Solving this equation gives us a present value of $26,662, which is option A.

On January 1, 2009, You Are Considering Making an Investment