What is the present value of $27 received at the end of each year for five years? Assume a discount rate of 9%. The first payment will be received one year from today (round to the nearest $1).
A) $42
B) $114
C) $88
D) $105

Question

Quizplus · Accepted Answer

The present value of an annuity can be calculated using the formula: PV = Pmt × [(1 - (1 + r)^-n) / r], where Pmt is the payment amount, r is the discount rate, and n is the number of periods. Plugging in the values: PV = $27 × [(1 - (1 + 0.09)^-5) / 0.09] ≈ $105.

What Is the Present Value of $27 Received at the End