Ask Question
BusinessBusiness
9 January, 04:01

The present value of an annuity is the sum of the discounted value of all future cash flows.

You have the opportunity to invest in several annuities. Which of the following 10-year annuities has the greatest present value (PV) ?

a. An annuity that pays $1, 000 at the beginning of each year.

b. An annuity that pays $1, 000 at the end of each year.

c. An annuity that pays $500 at the end of every six months.

d. An annuity that pays $500 at the beginning of every six months.

+3
Answers (1)
  1. 9 January, 06:59
    0
    An annuity that pays $1, 000 at the beginning of each year has the greatest present value (PV).

    Explanation:

    The present value (PV), provided the defined rate of return, is the current value of the potential amount of cash or source. Future cash reserves are discounted at rate of return, and the lower the real value of potential cash reserves the greater the discount rate.

    An annuity that pays $1,000 early in the year has the greatest present interest, since the earliest distribution of positive cash flows is expressed in the payment volume.

    It would that the discounts effect on cash flows lower than the other alternatives and maximize the volume of discounted cash flows.

    It offers the maximum current value by keeping the other variables stable.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “The present value of an annuity is the sum of the discounted value of all future cash flows. You have the opportunity to invest in several ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
An invoice for 450 has terms 2/10, 1/30, n/60. if you pay on the eighth day, how much will you remit
Answers (1)
Which of the following statements is true of a bond that is issued at a premium? A. At maturity, the bond will repay an amount that is greater than the face value. B. The bond will be issued at par. C.
Answers (1)
The large multinational beverage corporation, IDG, has entered 100 different markets around the globe.
Answers (1)
Walmart, target, and kmart offer a broad variety of merchandise, limited service, and low prices, which would classify them as
Answers (1)
You have just completed the appraisal of an office building and have concluded that the market value of the property is $2,500,000.
Answers (1)
New Questions in Business
Property taxes and fines represent which of the following classes of nonexchange transactions for government units? Group of answer choices Government-mandated nonexchange transactions.
Answers (1)
You want to go to Europe 5 years from now, and you can save $3,100 per year, beginning one year from today. You plan to deposit the funds in a mutual fund which you expect to return 8.5% per year.
Answers (1)
Pacific Packaging's ROE last year was only 6%; but its management has developed a new operating plan that calls for a debt-to-capital ratio of 40%, which will result in annual interest charges of $336,000.
Answers (1)
Joe has $100,000 in an investment account. He is looking to retire in 12 years. He needs a minimum of $240,000 in order to retire. What rate of return does Joe need to make on his investment in order to be able to retire?
Answers (1)
Toombs Media Corp. recently completed a 3-for-1 stock split. Prior to the split, its stock sold for $160 per share. The firm's total market value was unchanged by the split.
Answers (1)
Home » Business » The present value of an annuity is the sum of the discounted value of all future cash flows. You have the opportunity to invest in several annuities. Which of the following 10-year annuities has the greatest present value (PV) ? a.
Sign Up Forgot Password?