The Present Value of an Annuity of $5,000 to Be

question 6

Multiple Choice

The present value of an annuity of $5,000 to be received at the beginning of each of the 6 years at a discount rate of 4% would be:

• A) $26,210
• B) $27,258
• C) $3,950
• D) none of the above

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Definitions:

Per Annum

Annually or per year, often used to describe rates or amounts calculated over the span of a year.

Maturity Value

The total amount that will be paid to an investor at the end of a fixed-term investment, including the principal and interest.

Per-annum Rate

Another term for annual rate, indicating the interest rate or growth rate over a single year.

Bank Loan

Money lent by a bank to a customer, usually with interest, that is expected to be repaid within a certain period.