What Is the Present Value of a Four-Year Annuity of $100

question 46

Multiple Choice

What is the present value of a four-year annuity of $100 per year that begins 2 years from today (end of year 1) if the discount rate is 9%?

• A)$297.22
• B)$323.97
• C)$356.85
• D)$272.68

---

Definitions:

Internal Revenue Code

The comprehensive set of tax laws in the United States, governed by the Internal Revenue Service (IRS), that dictates federal tax obligations.

Federal Income Taxes

Taxes imposed by the federal government on the annual earnings of individuals, corporations, trusts, and other legal entities.

Corporations

Legal entities that are separate and distinct from their owners, with the ability to own assets, incur liabilities, and sell stock.

Double Taxation

A taxation principle referring to income taxes paid twice on the same source of income. This usually occurs with corporate income taxed at both the corporate level and again at the shareholder level on dividends.