Calculate the Present Value of a Deferred Annuity of 20

question 126

Multiple Choice

Calculate the present value of a deferred annuity of 20 annual payments of $25,000 each The interest rate is 8.5% compounded annually and the first payment will be made in six years.

• A) $306,472
• B) $211,760
• C) $157,339
• D) $145,013
• E) $104,289

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Definitions:

Hyaline Cartilage

A type of cartilage that is translucent and found in areas such as the nose, trachea, and at the ends of long bones where it reduces friction in joints.

Interdigitate

To interlock together like the fingers of two hands, often describing how cellular or tissue structures closely fit together.

Fontanels

Soft spots on a baby's skull where the bones have not yet fused together, allowing for growth of the brain.

Periosteum

A dense layer of vascular connective tissue enveloping the bones except at the surfaces of the joints.