Answer:
a.$65,072.07
b.$100,810.19
c.$110,254.18
d.$111,666.67
Explanation:
a. The value of investment today if payment per year of $6,700 is made for 15 years is given as follows:
Present value today=R[(1-(1+i)^-n)/i]
Where
R=payment to made yearly=$6,700
i=interest per annum=6%
n=number of payments=15
Present value today=6,700[(1-(1+6%)^-15)/6%]=$65,072.07
b. The value of investment today if payment per year of $6,700 is made for 40 years is given as follows:
Present value today=6,700[(1-(1+6%)^-40)/6%]=$100,810.19
c. The value of investment today if payment per year of $6,700 is made for 75 year is given as follows:
Present value today=6,700[(1-(1+6%)^-75)/6%]=$110,254.18
d. The value of investment today if payment per year of $6,700 occurred forever
Present value today=P/i=6,700/6%=$111,666.67
where P=6,700, i=6%
