The present value of the car is $13,614 for funds invested at 9% and annual payments of $3,500 starting one year from today.
Using the Excel Present Value formula, which reads as follows, one can calculate the car's present value:
The formula is PV (rate, n per, PMT, fv, type)
where as,
After that rate is 9%
In that case, n per is equal to 5 years.
The PMT now requires $3,500 in annual payments.
FV then stands for Future Value, which is not provided.
But Type is 0
Then we are putting the values of annual payments above:
Now put the value is = PV(9%,5,-3500,0)
After that = $13,613.78 or $13,614
Consequently, the car's present value is $13,614 in total.
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