Compute the Present Value of an Ordinary Annuity That Pays

question 199

Multiple Choice

Compute the present value of an ordinary annuity that pays $13,000 per year for 15 years at 10%. Present value of ordinary annuity of $1:
$$\begin{array} { | c | c | c | c | c | c | } \hline & 7 \% & 8 \% & 9 \% & 10 \% & 12 \% \\\hline 11 & 7.499 & 7.139 & 6.805 & 6.495 & 5.938 \\\hline 12 & 7.943 & 7.536 & 7.161 & 6.814 & 6.194 \\\hline 13 & 8.358 & 7.904 & 7.487 & 7.103 & 6.424 \\\hline 14 & 8.745 & 8.244 & 7.786 & 7.367 & 6.628 \\\hline 15 & 9.108 & 8.559 & 8.061 & 7.606 & 6.811 \\\hline\end{array}$$

• A) $98,878
• B) $99,745
• C) $97,578
• D) $100,178

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Definitions:

Interest Revenue

Income a company earns from its cash deposits, investments, or other interest-bearing accounts.

Miscellaneous Income

Income from non-core business activities that do not fit into other income categories, often irregular or infrequent.

Outstanding Checks

Checks that have been written and recorded in accounting but have not yet been cashed or cleared by the bank.

Bank Reconciliation

The process of matching and comparing figures from accounting records against those shown on a bank statement to ensure accuracy and consistency in financial records.