# What is the present value of an investment that promises to pay you $1,000 in five years if you...

## Question:

What is the present value of an investment that promises to pay you $1,000 in five years if you can earn 6 percent interest compounded annually?

## Annuity

The concept of an annuity is the equivalent of monthly fixed payments made at regular intervals eg., monthly or quarterly. Examples of annuities but not limited to regular deposit in the savings account, monthly loan repayments, quarterly insurance premium payment, etc.

## Answer and Explanation:

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Chapter 2 / Lesson 7An annuity is a fixed amount of income paid at regular intervals, such as monthly or quarterly. Learn the definition and formula for annuity, review examples of annuities, and understand how to determine the value of annuities.