Arun Wants to Have $500 at the END of Every

question 123

Multiple Choice

Arun wants to have $500 at the END of every year for 20 years. The bank pays 11% interest, compounded annually. Arun calculates that the present value of the ordinary annuity is $3,981.67. What would be the present value if payments were to be received at the BEGINNING of every period rather than the END?

• A) $5,183.91
• B) $5,525.98
• C) $4,043.26
• D) $4,419.65

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Definitions:

Adaptation

The process of adjustment or modification in structure or behavior to become better suited to an environment.

Intent

The purpose or design behind an action, often relevant in legal contexts to establish mental state or culpability.

Tenancy for Years

A leasehold interest in property for a definite period, which could be for any set length of time.

Implied Renewal Right

An implied renewal right is a legal principle that suggests a contract or agreement extends automatically beyond its original term unless one party gives notice to end it.