MediumFinance

Present Value of an Annuity

Morgan StanleyJ.P. Morgan

What is the present value of $100 paid at the end of each year for 3 years, discounted at 10% per year (in dollars)?

Hints

Use the annuity formula C·[1 − (1+r)^(−n)]/r.

Or discount each of the three $100 payments.

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