CIMA BA1 · Chapter 13 · Question 5 of 10
What is the present value of $4,000 received at the end of each year for five years, discounted at 10% a year (to the nearest cent)?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) $15,163.15
Explanation
Annuity factor = (1 - (1.10)^-5) / 0.10 = 3.7908. PV = 4,000 x 3.790787 = $15,163.15 (calculated with the unrounded factor).
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