What is the present value of $250 received at the beginning of each year for 21 years? Assume that the first payment is received today. Use a discount rate of 12%, and round your answer to the nearest $10.
A) $1,870
B) $2,090
C) $2,117
D) $3,243

Question

Quizplus · Accepted Answer

This problem involves calculating the present value of an annuity, which can be done using the formula PV = C * [(1 - (1+r)^(-n))/r], where PV is the present value, C is the periodic payment, r is the discount rate (expressed as a decimal), and n is the total number of payments. Plugging in the given values, we get PV = 250 * [(1 - (1+0.12)^(-21))/0.12] = $2,117. Since we are asked to round to the nearest $10, the answer is C: $2,117.

What Is the Present Value of $250 Received at the Beginning