If the Present Value of an Ordinary, 4-Year Annuity Is

question 83

Multiple Choice

If the present value of an ordinary, 4-year annuity is $1,000 and interest rates are 6 percent, what is the present value of the same annuity due?

• A) $943.40
• B) $1,000.00
• C) $1,040.00
• D) $1,060.00

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Definitions:

Payback Period

The amount of time it takes for an investment to generate an amount of income or cash flow equal to the cost of the investment.

Useful Life

The expected period over which an asset is estimated to be economically usable by one or more users, often influencing depreciation calculations.

Simple Rate Of Return

A method to evaluate the profitability of an investment, calculated by dividing the incremental annual income by the initial investment cost.

Sales Revenues

The income generated from the sale of goods or services before any costs or expenses are deducted.