Question

Calculating annuity values . Your company will generate $47,000 in annual revenue each year for the next seven years from a new information database. If the appropriate interest rate is 7.1 percent . what is the present value of the savings? Show step by step

Answer 1

Present value of the savings = $252415.91

Explanation;

Year	Annual Revenues	Calculations	Present value
1	$47000	$47000 / (1.071)^1	$43884.22
2	$47000	$47000 / (1.071)^2	$40975
3	$47000	$47000 / (1.071)^3	$38258.63
4	$47000	$47000 / (1.071)^4	$35722.35
5	$47000	$47000 / (1.071)^5	$33354.2
6	$47000	$47000 / (1.071)^6	$31143.04
7	$47000	$47000 / (1.071)^7	$29078.47
Total present value			$252415.91