Question

What is the value today of $1,400 per year, at a discount rate of 8 percent,...

What is the value today of $1,400 per year, at a discount rate of 8 percent, if the first payment is received 7 years from now and the last payment is received 29 years from today?

Homework Answers

Answer #1
Step 1 : Value of annuity 7 years from today
Present Value Of An Annuity
= C*[1-(1+i)^-n]/i]
Where,
C= Cash Flow per period
i = interest rate per period
n=number of period
= $1400[ 1-(1+0.08)^-22 /0.08]
= $1400[ 1-(1.08)^-22 /0.08]
= $1400[ (0.8161) ] /0.08
= $14,281.0411
Step 2 : Today value
PV= FV/(1+r)^n
Where,
FV= Future Value
PV = Present Value
r = Interest rate
n= periods in number
= $14281.0411/( 1+0.08)^7
=14281.0411/1.71382
= $8332.85
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
What is the value today of $1,800 per year, at a discount rate of 9 percent,...
What is the value today of $1,800 per year, at a discount rate of 9 percent, if the first payment is received 7 years from now and the last payment is received 30 years from today?
What is the value today of $1,300 per year, at a discount rate of 11 percent,...
What is the value today of $1,300 per year, at a discount rate of 11 percent, if the first payment is received 7 years from now and the last payment is received 26 years from today?
What is the value today of $3,000 per year, at a discount rate of 8 percent,...
What is the value today of $3,000 per year, at a discount rate of 8 percent, if the first payment is received 7 years from today and the last payment is received 25 years from today? (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.) Please show formula and BAII solution if possible.
What is the value today of $1,600 per year, at a discount rate of 11 percent,...
What is the value today of $1,600 per year, at a discount rate of 11 percent, if the first payment is received 8 years from now and the last payment is received 30 years from today? Multiple Choice $6,370.55 $6,243.14 $13,326.29 $6,300.66 $2,947.38
What is the value today of $1,600 per year, at a discount rate of 11 percent,...
What is the value today of $1,600 per year, at a discount rate of 11 percent, if the first payment is received 8 years from now and the last payment is received 30 years from today? Multiple Choice $6,370.55 $6,243.14 $13,326.29 $6,300.66 $2,947.38
What is the present value of $1,500 per year, at a discount rate of 6 percent,...
What is the present value of $1,500 per year, at a discount rate of 6 percent, if the first payment is received 7 years from now and the last payment is received 32 years from now?
What is the present value of $2,625 per year, at a discount rate of 6.9 percent,...
What is the present value of $2,625 per year, at a discount rate of 6.9 percent, if the first payment is received six years from now and the last payment is received 20 years from now?
What is the present value of $4,100 per year at a discount rate of 9 percent...
What is the present value of $4,100 per year at a discount rate of 9 percent if the first payment is received 5 years from now and the last payment is received 15 years from now?
What is the present value of $4,100 per year at a discount rate of 9 percent...
What is the present value of $4,100 per year at a discount rate of 9 percent if the first payment is received 5 years from now and the last payment is received 15 years from now?
What is the present value of $4,000 per year, at a discount rate of 10 percent,...
What is the present value of $4,000 per year, at a discount rate of 10 percent, if the first payment is received six years from now and the last payment is received 20 years from now? (Do not round intermediate calculations. Round the final answer to 2 decimal places.)
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT