Present Value of an Annuity Due If the Present Value

question 123

Multiple Choice

Present Value of an Annuity Due If the present value of an ordinary, 4-year annuity is $1,000 and interest rates are 6 percent, what's the present value of the same annuity due?

• A) $943.40
• B) $1,000.00
• C) $1,040.00
• D) $1,060.00

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Definitions:

Lease Payments

Regular payments made by a lessee to a lessor for the use of an asset over a specified period.

Lease Inception

The point at which the lease agreement is executed, signifying the beginning of the lease term.

Related Liability

An obligation that is directly associated with the operating activities or financial situation of a business.

Operating Lease

A lease agreement allowing one to use an asset without ownership, typically with shorter terms than a finance lease.