Question

What is the present value of $3,300 per year received annually at the end of years 14 to 66 and the interest rate is 8%?

Answer 1

Given data,

Payments received (PMT) = $ 3300 per year; Interest Rate (RATE) = 8% and tenure = 66-14 = 52 years

Using Excel formula;

PV(RATE,NPER,-PMT,FV,0) = PV(8%,52,-3300,,0) = $ 40495.97;

However the above PV is acually the value as at beginning of the year 14; Hence, to find the Present Value as at year 0, the same above PV value need to be considered as the Future value as at Year 14

PV(8%,14,,40495.97,) = $ 13787.30

Answer: Present Value is $ 13787.30