Question

Mrs Crawford will receive $7,250 a year for the next 17 years from her trust.

if a 9 percent interest rate is applied, what is the current value of the future payments?

Present value?

Answer 1

Mrs Crawford will receive $7,250 a year for the next 17 years from her trust.

if a 9 percent interest rate is applied, what is the current value of the future payments?

Present value?

Mrs. Crawford to receive $ 7,250 ayear for next 17 years.

Calculating the Present vlaue of the periodic paymnets using Ordinary Annuity formula:-

Where, C= Periodic Payments = $ 7250

r = Periodic Interest rate = 0.09

n= no of periods = 17 years

So, the present value is $ 61,941.33