What Is the Formula for the Present Value of an Annuity

question 47

Multiple Choice

What is the formula for the present value of an annuity due?

• A) \( C \times\left[\left(P_{\mathrm{O}_{N, t}}\right)(P k, t)\right] \)
• B) \( C \times\left[\frac{1-\frac{1}{(1+i)^{n}}}{i}\right] \)
• C) \( C \times\left[\frac{1-\frac{1}{(1+i)^{n-1}}}{i}+1\right] \)
• D) \( C \times\left[\frac{(1+i)^{n}-1}{i}\right] \)

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Definitions:

Ordinary Repair

Expenditures to maintain the operating efficiency and expected productive life of an asset, treated as an expense.

Capitalization

The total value of all a company's outstanding shares of stock, calculated by multiplying the share price by the total number of shares.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenues.

Repairs and Maintenance

The expenses a company incurs to keep its assets in working condition, not extending the life of the asset but rather restoring it or maintaining current condition.