Question

How much would you pay today for an investment that provides you $2,360 each year for the

next 5 years, starting next year, and $18,300 18 years from now if the interest rate is 4.17% APR compounded annually?

Answer 1

Amount to pay today = PV of future cash flow
PV of cash flow
	i	ii	iii=i*ii
Year	Cash flow	PVIF @ 4.17%	Present value
1	2360	0.959969	$   2,265.53
2	2360	0.921541	$   2,174.84
3	2360	0.884651	$   2,087.78
4	2360	0.849238	$   2,004.20
5	2360	0.815242	$   1,923.97
18	$18,300	0.479327	$   8,771.69
Total			$ 19,228.00
Answer =			$ 19,228.00