TABLE 9.4Present Value Interest Factor (PVIFA) for a $1 Ordinary Annuity


Further examination of Table 9.4 shows how the present value of a $1 annuity decreases with various combinations of interest rates and time periods. For example, if $1,000 is paid at the end of each year (beginning with year one) for ten years at an 8% interest rate, the present value of the annuity would be $6,710 ($1,000 × 6.710). If the interest rate is 10% for ten years, the present value of the annuity would be $6,145 ($1,000 × 6.145). These results demonstrate the costs of higher interest rates on the present values of annuities.

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