Present Value of an Annuity

Determine the present value of $200,000 to be received at the end of each of four years, using an interest rate of 7%, compounded annually, as follows:

a.By successive computations, using the present value table inExhibit 8. Round to the nearest whole dollar.

First year$Second Year$Third Year$Fourth Year$Total present value$b.By using the present value table inExhibit 10. Round to the nearest whole dollar.

$

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

over the 4 years.