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John Smith will receive annual payments of $800 at the end of each year for 12...

John Smith will receive annual payments of $800 at the end of each year for 12 years. The first payment will be received in year 4. What is the present value of these payments if the discount rate is 7 percent?

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Answer #1

present value of all payments=sum of all discounted inflows at 7%

Present value of inflow=Inflow/(1+discount rate)^number of years

Hence presnt value of all inflows=$4254.70

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