What is the value today of receiving $3,000 at the end of each year for the next three years,assuming an interest rate of 3% compounded annually?
A)$8,486.
B)$8,251.
C)$9,000.
D)$9,273.

Question

Quizplus · Accepted Answer

We can use the formula for the present value of an annuity:

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

where PV is the present value, C is the amount received each year, r is the interest rate, and n is the number of years.

Plugging in the given values, we get:

PV = 3000 * [(1 - (1 + 0.03)^(-3)) / 0.03] = $8,486.22

Therefore, the answer is A).

What Is the Value Today of Receiving $3,000 at the End