Robert wants to have \( \$ 2,300 \) at the end of every three months for 8 years. The bank pays \( 8 \% \) interest, compounded quarterly. What would be the present value if payments were to be received at the BEGINNING of every period? (Use Table 12-2) Select one: a. \( \$ 52,016.20 \) b. \( \$ 55,056.71 \) c. \( \$ 55,344.83 \) d. \( \$ 55,986.21 \)
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To determine the present value of the annuity with payments received at the beginning of each period, you can use the present value of an annuity due formula. The formula for the present value of an annuity due is given by: \[ PV = P \times \left( \frac{1 - (1 + r)^{-n}}{r} \right) \times (1 + r) \] Where: - \(PV\) = present value - \(P\) = payment per period (\$2,300) - \(r\) = interest rate per period (annual rate of 8% compounded quarterly = 2% per quarter = 0.02) - \(n\) = total number of payments (8 years × 4 quarterly payments = 32) Plugging those values into the equation results in: \[ PV = 2300 \times \left( \frac{1 - (1 + 0.02)^{-32}}{0.02} \right) \times (1 + 0.02) \] Calculating it step by step, you'll find that the present value is approximately \( \$ 55,344.83 \), which corresponds to option c. So the correct answer is c. \( \$ 55,344.83 \).