The Present Value Factor for Annuities Is Calculated As

question 114

Multiple Choice

The present value factor for annuities is calculated as:

• A) (1 + present value factor)/r
• B) (1 - present value factor)/r
• C) Present value factor + (1/r)
• D) (Present value factor/r) + (1/r)

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Definitions:

Annual Return

The percentage change in an investment's value over a one-year period, including any dividends or interest payments.

Nominal Rate of Return

The rate of return on an investment without adjusting for inflation.

Real Future Value

The measure of the future value of an investment or stream of cash flows, adjusted for inflation, to reflect the actual purchasing power of that future amount.

Inflation

The rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.