# This problem demonstrates the dependence of an annuitys present value on the size of the periodic payment.

## Question:

a. $1000.

b. $2000.

c. $3000.

Use a discount rate of 8% compounded annually. After completing the calculations, the present value is proportional to the size of the periodic payment.

Discount Rate

Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...

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