Answer: $44,218.

The correct answer is **B. $44,218**. ### Explanation: 1. **Step 1: Calculate the present value of the annuity in Year 4.** - The annuity is an ordinary annuity with 7 payments of $10,000 each, discounted at 6%. - The formula for the present value of an ordinary annuity is: $$ PV = A \left[ \frac{1 - \frac{1}{(1 + r)^N}}{r} \right] $$ - Substituting the values: $$ PV_4 = 10,000 \left[ \frac{1 - \frac{1}{(1 + 0.06)^7}}{0.06} \right] = 55,823.81 $$ 2. **Step 2: Discount the Year 4 value back to today (Year 0).** - The present value today is calculated by discounting the Year 4 value for 4 years: $$ PV_0 = PV_4 \times (1 + r)^{-4} $$ $$ PV_0 = 55,823.81 \times (1 + 0.06)^{-4} = 44,217.89 \approx 44,218 $$ 3. **Calculator Solution:** - **Step 1:** END mode; N = 7; I/Y = 6; PMT = -10,000; FV = 0; solve for PV = 55,823.81. - **Step 2:** END mode; N = 4; I/Y = 6; PMT = 0; FV = -55,823.81; solve for PV = 44,217.89. **Why not A or C?** - **A ($41,715):** Incorrectly discounts the annuity from Year 5 instead of Year 4. - **C ($55,824):** Represents the value of the annuity in Year 4, not today.

Author: LeetQuiz Editorial Team