Present value of an annuity Determine the present value of $200,000 to be received at the end of each of 4 years, using an interest rate of 7%, compounded annually, as follows: a. By successive computations, using the present value of $1 table in Exhibit 5. Round to the nearest whole dollar. First year Second Year Third Year Fourth Year Total present value $ b. By using the present value of an annuity of $1 table in Exhibit 7. $ 677,440 X c. Why is the present value of the four $200,000 cash receipts less than the $800,000 to be received in the future? The present value is less due to the compounding of interest over the 4 years. Feedback Check My Work Review the time value of money concept. Recall that the time value of money concept recognizes that cash received today is worth more than the same amount of cash to be received in the future.