Final answer:
The six-year present value annuity factor at an interest rate of 9 percent is a financial concept used to calculate the present value of six years' worth of annuity payments, discounted at a 9% rate. While the exact factor is not provided here, it is used to adjust future annuity payments to their present value, reflecting the time value of money. The exact value can be found using a financial calculator or a present value table.
Step-by-step explanation:
The question "What is the six-year present value annuity factor at an interest rate of 9 percent?" pertains to the field of finance within Business studies, and it refers to the factor used to calculate the present value of an annuity that pays out for six years at a given discount rate, which is here specified as 9%. To determine the present value of such an annuity, one would typically use a financial calculator or a present value annuity table to find the appropriate factor.
Since specific tables or formulas are not provided here, I cannot give the exact number. However, I can explain conceptually that the present value annuity factor is calculated by considering each payment in the annuity as a separate present value calculation under the specific interest rate, and then summing these values. At a 9% discount rate, each future payment is worth less in present terms because money today is valued more than the same amount in the future due to its potential to earn interest.
If we had an example where the water company issued a $10,000 ten-year bond with a 6% interest rate and you are considering buying it when the market interest rate is 9%, you would expect to pay less than the face value of the bond because the coupon payments are less attractive at the higher prevailing market rates.