What Is the Present Value of a 5-Year Ordinary Annuity

question 21

Multiple Choice

What is the present value of a 5-year ordinary annuity with annual payments of $200,evaluated at a 15 percent interest rate?

• A) $670.43
• B) $842.91
• C) $1,169.56
• D) $1,348.48
• E) $1,522.64

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Definitions:

S Corporation

A type of corporation that is eligible for, and elects, special taxation status.

Shareholders

Individuals or entities that own shares in a company, giving them partial ownership and potentially a say in company decisions depending on the type of shares held.

Sole Proprietorship

A business owned and operated by a single individual, with no legal distinction between the owner and the business entity.

Legal Structure

Pertains to the type of legal organization an entity chooses for the formation of their business, such as a corporation, partnership, limited liability company (LLC), or sole proprietorship.