This is a question related to the concept of time value of money. As per finance professor, "The basic idea of time value of money is that a dollar today is worth more than a dollar tomorrow. That is you would rather have a dollar now than later, BUT would rather pay later if possible." Present value is the present worth of the money with a specified discount rate.
Annuity is the series of fixed payments over a particular period of time. Present value of annuity is calculated by , ...
The solution discusses Ordinary Annuity and Perpetuity.