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, 2012. You are eager to earn 3%. What is the present value of the investment on January 1, 2009?
A)$28,286.
B)$25,886.
C)$26,662.
D)$27,300.PVA = $10,000 x (5.41719* - 2.82861**) = $25,886 *PVA of $1: n=6; i=3% **PVA of $1: n=3; i=3%

Question

Quizplus · Accepted Answer

Using the present value of an annuity formula, we can calculate the present value of the three payments: 
PVA = $10,000 x (1 - 1/(1+0.03)^3)/0.03 = $25,886

Therefore, the present value of the investment on January 1, 2009, is $25,886. The best choice is B.

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