Question:
An annuity will pay eight annual payments of $100, with the first payment to be received one year from
now.
If the interest rate is 12 percent per year, what is the present value of this annuity? Use the appropriate
table located at the end of the textbook to solve this problem.
a. $497
b. $556
c. $801
d. $897
Answer:
a. PVA = $100 x 4.96764 = $497
An annuity will pay eight annual payments of $100, with the first payment to be received one year from
now.
If the interest rate is 12 percent per year, what is the present value of this annuity? Use the appropriate
table located at the end of the textbook to solve this problem.
a. $497
b. $556
c. $801
d. $897
Answer:
a. PVA = $100 x 4.96764 = $497
