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Compute the Present Value of an Ordinary Annuity That Pays

question 39

Multiple Choice

Compute the present value of an ordinary annuity that pays $13,000 per year for 15 years at 10%. Present value of annuity of $1:
7%8%9%10%12%117.4997.1396.8056.4955.938127.9437.5367.1616.8146.194138.3587.9047.4877.1036.424148.7458.2447.7867.3676.628159.1088.5598.0617.6066.811\begin{array} { | l | l | l | l | l | l | } \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}


Definitions:

Price Decline

A decrease in the market price of an asset or security over a certain period.

Zero-Coupon Bond

A bond that does not pay periodic interest payments and is issued at a discount to its face value, which is paid at maturity.

Annual Coupon Bond

A type of bond that pays interest to the bondholder on an annual basis.

Portfolio Value

The total worth of all the financial assets held in an investment portfolio, which can vary over time based on market conditions.

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