document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1151154>Question 1151154</A>: <I><SPAN STYLE=\"word-break: break-all;\"> Antonia receives a $10,000 benefit payment at the end of each year. She can invest these payments in an account yielding 4% interest, compounded annually. Assuming she just received this year’s payment, what is the present value of her next five payments?\r<BR>\n" );
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document.write( "A. <BR>\n" );
document.write( "$20,352<BR>\n" );
document.write( "B. <BR>\n" );
document.write( "$41,253<BR>\n" );
document.write( "C. <BR>\n" );
document.write( "$44,518<BR>\n" );
document.write( "D. <BR>\n" );
document.write( "$44,815 </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #772791 by </B><A HREF=/tutors/aboutme.mpl?userid=MathLover1><B>MathLover1(20849)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=MathLover1><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=MathLover1><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=772791\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> <BR>\n" );
document.write( "Antonia receives a $<IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=10000 ALIGN=MIDDLE  ALT=\"10000\"   DISABLED_style= \"max-width:90%; height:auto;\" > benefit payment at the end of each year. <BR>\n" );
document.write( "She can invest these payments in an account yielding <IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=4 ALIGN=MIDDLE  ALT=\"4\"   DISABLED_style= \"max-width:90%; height:auto;\" >% interest, compounded annually. Assuming she just received this year’s payment, what is the present value of her next five payments?\r<BR>\n" );
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document.write( "a $<IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=10000 ALIGN=MIDDLE  ALT=\"10000\"   DISABLED_style= \"max-width:90%; height:auto;\" > benefit payment<BR>\n" );
document.write( "<IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=r=4 ALIGN=MIDDLE  ALT=\"r=4\"   DISABLED_style= \"max-width:90%; height:auto;\" >%=<IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=0.04 ALIGN=MIDDLE  ALT=\"0.04\"   DISABLED_style= \"max-width:90%; height:auto;\" > interest<BR>\n" );
document.write( "n=5 years\r<BR>\n" );
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document.write( "Because the equal payments occur at the end of each year, we know we have an ordinary annuity.\r<BR>\n" );
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document.write( "The equation for calculating the present value of an ordinary annuity is:\r<BR>\n" );
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document.write( "<IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=PVOA+=+FV+%28%281+-+%281+%2F+%281+%2B+r%29%5En%29%29+%2F+r%29 ALIGN=MIDDLE  ALT=\"PVOA+=+FV+%28%281+-+%281+%2F+%281+%2B+r%29%5En%29%29+%2F+r%29\"   DISABLED_style= \"max-width:90%; height:auto;\" >\r<BR>\n" );
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document.write( "<IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=PVOA+=+10000+%28%281+-+%281+%2F+%281+%2B+0.04%29%5E5%29%29+%2F+0.04%29 ALIGN=MIDDLE  ALT=\"PVOA+=+10000+%28%281+-+%281+%2F+%281+%2B+0.04%29%5E5%29%29+%2F+0.04%29\"   DISABLED_style= \"max-width:90%; height:auto;\" >\r<BR>\n" );
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document.write( "<IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=PVOA+=+10000+%2A4.4518 ALIGN=MIDDLE  ALT=\"PVOA+=+10000+%2A4.4518\"   DISABLED_style= \"max-width:90%; height:auto;\" >\r<BR>\n" );
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document.write( "<IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=PVOA+=+44518 ALIGN=MIDDLE  ALT=\"PVOA+=+44518\"   DISABLED_style= \"max-width:90%; height:auto;\" >\r<BR>\n" );
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document.write( "This PVOA calculation tells you that receiving $<IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=44518 ALIGN=MIDDLE  ALT=\"44518\"   DISABLED_style= \"max-width:90%; height:auto;\" > today is equivalent to receiving $<IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=10000 ALIGN=MIDDLE  ALT=\"10000\"   DISABLED_style= \"max-width:90%; height:auto;\" > at the end of each of the next five years, if the time value of money is <IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=4 ALIGN=MIDDLE  ALT=\"4\"   DISABLED_style= \"max-width:90%; height:auto;\" >% per year. If the <IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=4 ALIGN=MIDDLE  ALT=\"4\"   DISABLED_style= \"max-width:90%; height:auto;\" >% rate is Antonia's required rate of return, this tells you that Antonia could pay up to $<IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=44518 ALIGN=MIDDLE  ALT=\"44518\"   DISABLED_style= \"max-width:90%; height:auto;\" > for the five-year annuity.\r<BR>\n" );
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document.write( "Answer: C. $<IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=44518 ALIGN=MIDDLE  ALT=\"44518\"   DISABLED_style= \"max-width:90%; height:auto;\" >\r<BR>\n" );
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document.write( " </SPAN>\n" );
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