Question

What would the value in today’s dollars be if you receive $30,000 per month, starting five years from today, for ten years (120 payments)? Assume your interest rate is 9% (monthly).

Answer #1

Value after 5 years =

where r is the rate of Return for compounding period = 9%

n is the no of compounding period i.e. 120 months

=

=

= $ 333,322.58

Value today = Future Value / (1+r)n

= 333,322.58 / (1+0.09)60

= 333,322.58 / 176.03129196

= $ 1,893.54

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