What Is the Present Value of an Ordinary Annuity of $200

question 45

Multiple Choice

What is the present value of an ordinary annuity of $200 per month for two years,discounted at 6% per annum? (Assume monthly compounding)

• A)$4 800
• B)$5086.39
• C)$ 4 535.14
• D)$ 4 512.57

---

Definitions:

Monthly Interest Rate

The percentage of interest that is charged or earned on a loan or investment over a month's time period.

Credit Policy

A set of guidelines that a company follows to determine credit terms for customers, such as payment period and discount rates.

Discounted Price

Discounted Price refers to a price that has been reduced from the original or listed cost, often to accelerate sale or clearance or as part of promotional offers.

Credit Terms

Credit terms are the payment conditions imposed by suppliers on customers, including the amount of time allowed to pay off the amount due.