What's the Present Value of a 4-Year Ordinary Annuity of $2,250

question 75

Multiple Choice

What's the present value of a 4-year ordinary annuity of $2,250 per year plus an additional $1,550 at the end of Year 4 if the interest rate is 5%?

• A) $7,773.01
• B) $9,253.58
• C) $11,474.44
• D) $7,125.25
• E) $7,402.86

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Definitions:

Quantity Supplied

The total amount of a product or service that producers are willing and able to sell at a given price in a specific time period.

Supply

The aggregate supply of a certain item or service made available for consumer purchase.

Price Elasticity

The measure of how much the quantity demanded of a good responds to a change in the price of that good, indicating its sensitivity to price changes.

Midpoint Method

A technique used to calculate the price elasticity of demand or supply, avoiding the problem of using different base values for percentage calculations.