Question

What's the present value of a $840 annuity payment over four years if interest rates are 8 percent? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Present value $

Answer 1

The present value of a $840 annuity payment over four years at an interest rate of 8 percent is $593.67.

Step-by-step explanation:

The present value of a $840 annuity payment over four years at an interest rate of 8 percent can be calculated using the present value formula. The formula is:

Present Value = Payment / (1 + Interest Rate) ^ Time

Let's plug in the values:

Present Value = 840 / (1 + 0.08) ^ 4

Using a calculator, the present value turns out to be approximately $593.67. Therefore, the present value of a $840 annuity payment over four years at an interest rate of 8 percent is $593.67.