Determine the period of deferral of the following conditions. a. Annual payments of 8,000 for 12 years that will start 2 years from now. b. Quarterly payments of 5,000 for 8 years that will start 12 quarters from now. c. Monthly payments of 2,000 for 5 years that will start 14 months from now.

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Q: What is the period of deferral in the deferred annuity?

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A: The period of deferral is the total period in which the payment has not been made.

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A:

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Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.