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A deferred annuity's present worth is found by applying the series present worth factor and then

  • A.discounting the result back to time zero
  • B.compounding the result forward to the last payment
  • C.multiplying by the number of deferred periods
  • D.adding the deferred payments at face value

Answer: A

The series factor places the value one period before the first payment, which is somewhere in the middle of the horizon, so a single-payment present worth factor brings it the rest of the way. Two factors in sequence handle any shifted series.

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