Question
(b) What is the present value of $30,500 to be received at the end of each...
(b) What is the present value of $30,500 to be
received at the end of each of 7 periods, discounted at 9%?
(Round answer to 2 decimal places, e.g.
25.25.)
Homework Answers
Answer #1
The Answer is $153,505.06
Calculation of Present Value
Note - 9% can also be written as 0.09
How did we calculate the discounting factors @9%
Period 1
= 1/1.09
= 0.9174
Period 2
= 0.9174 / 1.09
= 0.8417
Period 3
= 0.8417 / 1.09
= 0.7722
Period 4
= 0.7722 / 1.09
= 0.7084
Period 5
= 0.7084 / 1.09
= 0.6499
Period 6
= 0.6499 / 1.09
= 0.5963
Period 7
= 0.5963 / 1.09
= 0.5470
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