Question

CH6 You just won first place in an origami contest! As your prize, you will receive...

CH6

You just won first place in an origami contest! As your prize, you will receive $1,000 a month for 12 years. If you can earn 6 percent APR on your money, what is this cash flow worth to you today?

Group of answer choices

$102,474.74

$98,414.56

$95,333.33

$101,458.40

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Homework Answers

Answer #1

Information provided:

Monthly earning= $1,000

Time= 12 years*12= 144 months

Interest rate= 6%/12= 0.50% per month

The question is solved by calculating the present value.

The present value is calculated by entering the below in a financial calculator:

PMT= 1,000

N= 144

I/Y= 0.50

Press the CPT key and PV to compute the present value.

The value obtained is 102,474.74.

Therefore, the cash flow is worth $102,474.74 today.

In case of any query, kindly comment on the solution.

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