you are purchasing a used car and will make 5 annual payments of $3,500 starting one year from today. if your funds could be inv

Question

10 months ago

10

ested at 9%, what is the present value of the care? (round answer to nearest dollar) $20,946 $13,614 $14,839 $17,500

1 answer:

Jet001 [13] · Answer 1 · 2024-06-20T22:24:39+03:00

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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