To compute the present value of $1,000 annuity received at the end of each of the next three years and discounted at the rate of 5% per year, you should use he following EXCEL command.
A) ANN
B) TVM
C) RATE
D) PV

Question

Quizplus · Accepted Answer

The PV function is used to compute the present value of future cash flows. In this case, we have a series of future cash flows (the $1,000 annuity received at the end of each of the next three years) that we want to discount back to the present using a given rate (5% per year). The PV function is designed specifically for this purpose, and we can input the relevant information (rate, number of periods, payment amount) to get the present value of the annuity.

To Compute the Present Value of $1,000 Annuity Received at the End