Johnson has an annuity due that pays 600 per year for 15 years. ...

[dalyningkenk]

Johnson has an annuity due that pays 600 per year for 15 years. What is the present value of the cash flows if they are discounted at an annual rate of 7.50?
 
  A) 5,296.27
  B) 5,693.49
  C) 9,000.00
  D) 9,675.00

Question 2

A series of equal periodic finite cash flows that occur at the beginning of the period are known as a/an ________.
 
  A) ordinary annuity
  B) annuity due
  C) perpetuity
  D) amortization

[okolip]

Answer to Question 1

Answer: B
Explanation: B)
PV = PMT   (1 + r)1 = 600   (1.075)1 = 5,693.49.
MODE = BEGIN
INPUT 15 7.5 ? -600 0
KEY N I/Y PV PMT FV
CPT 5,693.49

Answer to Question 2

Answer: B