You Are Comparing Two Annuities with Equal Present Values

question 80

Multiple Choice

You are comparing two annuities with equal present values. The applicable discount rate is 7.5%. One annuity pays $5,000 on the first day of each year for twenty years. How much does the second annuity pay each year for twenty years if it pays at the end of each year?

• A) $4,651
• B) $5,075
• C) $5,000
• D) $5,375
• E) $5,405

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